Devro to close collagen facility in Bellshill, Scotland

UK-based collagen products manufacturer Devro is set to close its manufacturing facility in Bellshill, Scotland.

The closure is aimed at increasing its portfolio of products manufactured in the company’s Moodiesburn site in Lanarkshire.

The company intends to relocate some of Bellshill’s manufacturing assets within the wider group.

Devro noted that the plant closure is reported to be part of the company’s global manufacturing footprint review, which aims to increase its efficiency and align available capacity to the group’s growth ambitions.

The company intends to cease operations at the Bellshill plant next year following a consultation process, which will result in the loss of 90 employees.

As a result of this closure, Devro is expected to incur an exceptional cost of £15m, of which £10m will be in cash.

Additionally, the company is analysing its ongoing supply strategy, as part of its global manufacturing footprint review, which could result in non-cash exceptional impairment charges in this fiscal year incurred for partial write-downs of its plants in the US and China.

These plants are part of its global footprint and a new supply strategy will enhance the agility and flexibility of its supply chain.

In its latest trading update, Devro said that the sales volume improved during the third quarter, with a 1% increase in collagen casings.

The company said in a statement: “We continue to expect a modest acceleration of volume growth in Q4 2019 with full-year volume growth expected at 1%.

“Our cost-saving initiatives are progressing well and we are confident of achieving our guidance of £7m in FY 2019. We continue to expect the covenant net debt / underlying EBITDA ratio to be around 2x by 31 December.”