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China will represent half the world market in edible collagen casings for sausages by 2015, says Peter Page, chief executive of Devro. He intends Devro to take full advantage of that and the growth expected in other emerging markets as individuals eat more meat. Capital expenditure at Devro rose to £39m as the group expands and modernises. If it had not been for the cost of financing the group’s £31m net debt and a £600,000 non-cash charge relating to the group’s pension scheme, Devro’s profits growth would have been about 6 per cent on last year. However, changes in the rates used to calculate Devro’s pension liabilities have lifted its obligations by £5.3m to £51.5m. The group has agreed to contribute more into the scheme to fund the deficit. The shares are on a p/e ratio of about 14 times next year’s earnings forecasts, which looks expensive compared with other UK food manufacturers. But unlike Devro, few of them are global businesses earning operating margins of 18 per cent.
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