Devro's annual revenue was broadly flat, reflecting weak demand for its sausage skins.

Revenue in the year to December 31st 2013 came to £242.7m, up 1% on the previous year. Operating profit before exceptional items fell 1% to £42.1m.

Earnings per share, however, jumped 7% to 20.8p, driven by Czech Republic where the company benefits from a relatively low tax rate.

Devro has completed the upgrade of its facility in the Czech Republic, which has added 9% to the group's total manufacturing capacity and will lead to cost reductions at the site.

The company also redeveloped the US business and is investing £50m in the construction of a manufacturing plant in China.

In emerging markets, the total volume of sausage casings sold increased by 10%, most markedly in China, South East Asia and Latin America.

However, demand for casings was flat or declining in developing markets. In the US total volumes of sausage sold increased by 2%.

In the UK, volumes of sausage sold dropped 5% over the two years to 2013, due to the rise of pork prices to all-time high levels.

Demand in Western Europe was subdued, as a result of the general economic climate adversely affecting consumer spending patterns, particularly during the first half of the year.

The market in Japan improved but Australia experienced a drop in volumes of processed sausage consumed and therefore a lower demand for collagen casings.

Devro said it is working to ensure the business is well-positioned to supply growing demand in emerging markets. The group will also displace gut with more efficient casings in developed markets.

"In order to limit any further increase in the inventory levels that had been increased during 2013 in anticipation of stronger demand in 2014, Devro will lower production volumes during the year to balance short-term supply and demand," the firm said.

The board raised the dividend by 4% to 8.8p.

Shares tumbled 8.20% to 280p at 10:58 on Tuesday.

RD

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