Devro has reported underlying operating profits of £42m, up 2.9% on the prior year, along with a 5.5% rise in group revenue.
The Moodiesburn-based manufacturer of collagen products for the food industry has therefore proposed a final dividend of 6.5 pence, making a total dividend of 9.3p, up 3.3% on the prior year, and the first increase since 2018.
Results for the year ended 31 December 2021 also revealed an operating margin up 10 basis points to 16.6%, despite inflationary pressures.
Strong free cash flow generation of £35.6m has lead to covenant net debt of £88.6m - down from £109.5m in 2020.
The volume of its edible collagen casings rose by 4.9% during the year, with emerging markets up 7.1%, driven by Latin America and South East Asia.
Mature markets were up 3.7%, driven by 20% growth in North America, due to strength in the snacking category and improving trends in most other markets.
The financial update also noted a transfer of production lines from Bellshill to the group's Czech site was completed on time and on budget.
As for the outlook, Devro expects an inflation headwind, mainly driven by energy and raw material costs.
To mitigate this, in the second half of last year and into early 2022, the group has enacted inflation-led price rises.
It expects to make good full year progress, based on current market conditions and the robust order book and pipeline, despite the £3.1m hedging gain from 2021 not repeating in 2022, giving a foreign exchange headwind.
The statement added that the board expects another strong year of cash generation, even with higher capital investment to meet future growth.
Chief executive Rutger Helbing commented: “Our improved performance was achieved despite ongoing challenging market conditions, including inflationary headwinds.
“We are also pleased with our free cash flow performance which provides us with increasing optionality to invest in new products, to increase manufacturing capacity and to grow the dividend.
“The group has started the year well and, despite ongoing macro-economic headwinds including inflationary pressures and based on current exchange rates, we expect to make good progress in 2022.”
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