Devro shares tumble as it eyes flat volumes and prices

- Volumes and prices expected to be flat in 2014- Manufacturing streamlining plans brought forward- Expects volumes and prices to be flat in year aheadShares of sausage skins maker Devro tumbled after it cautioned that while sales in the last four months were strong in markets such as Germany, Japan and China and the US, volumes deteriorated in its other key markets.The group, which manufactures collagen products for the food industry, said sales were affected by a variety of factors such as FX headwinds, devaluations in Latin America, the European Union pork meat import ban in Russia and the impact of price increases in Europe last year.Negative currency translation will reduce operating profits by £5m and £13m on revenue, it said.Devro added that, given the current market situation, it has taken a more prudent view on volumes and prices in 2014. They are currently expected to be flat and, as a result, the group has decided to bring forward its manufacturing streamlining plans.Exceptional cash costs over the next two years relating to these changes are expected to total approximately £6m together with non-cash costs of around £10m, it explained. These actions are expected to reduce manufacturing costs by £4m in 2015."Over the next year, Devro will move from older, higher cost production lines to a greater proportion of manufacturing being on our most cost efficient technology," it said.Devro said it remains confident that with a low cost manufacturing base it will be in a stronger position to meet demand global for collagen casing.Trading in the first quarter was below the previous year but March showed signs of improvement, which have continued into April.Its shares fell 8.86% to 216.00p at 08:40 in London.CJ