Demand sees Devro push up profits

The company, which each year makes enough collagen casing to stretch to the moon and back several times, is also benefiting as its alternative to increasingly expensive sheep gut casings allows meat processors in the developed world to cut costs.

Devro, which is listed on the FTSE 250 index of mid-sized companies and makes casings for everything from German bratwurst to breakfast bangers, estimates that global collagen consumption grew 10 per cent in 2011.

“The volume growth is the key to this story,” said Investec analyst Nicola Mallard, who upped Devro’s target price to 335p from 315p following full-year results published yesterday.

“They’ve got access to developing and emerging markets – places like Latin America and eastern European markets have been particularly strong for them.”

Shares in the company fell 4 per cent, however, as analysts pointed to a strong rally in the run-up to the results and worries over rising energy and raw materials costs.

Devro said it was also positive about the coming year after a strong finish to 2011 that helped it overcome disruption earlier in the year caused by earthquakes, floods and poor weather in a number of its markets.

The Scotland-based company said it hoped to build on sales growth in Latin America and Russia.