UPDATE 1-Devro sees improving demand, keeps full-year outlook

(Adds details, analyst comments; updates share movement)

By Aastha Agnihotri

Oct 21 (Reuters) - Devro Plc, which makes ediblecollagen casings for sausages, said it was seeing signs ofimprovement in demand, with volumes picking up in China, Japanand Germany, and maintained its full-year outlook.

Shares in the company, which is based in Moodiesburn, nearGlasgow, rose more than 6 percent on Tuesday morning on theLondon Stock Exchange.

"It's obviously be taken as a positive today that trading isin line with expectations given that they had a profit warningearlier in the year," analyst Charles Hall of Peel Hunt toldReuters.

Devro had warned in April that 2014 profit would be morethan 20 percent below last year's due to lower volumes and costsrelated to investments in low-cost manufacturing technology.

Analysts on average expect Devro's full-year pretax profitat 27.8 million pounds ($44.9 million) , on revenue of 230.4million pounds, according to Thomson Reuters I/B/E/S.

Devro said in July that it planned to cut 130 jobs inScotland and invest about 90 million pounds in new plants in theUnited States and China to take advantage of rising demand forits products in those countries.

The second phase of restructuring in Scotland is expected toconclude at the end of the first quarter of 2015, the sausagemaker said on Tuesday.

The group's capacity is now coming more in line with demandand inventories are reducing, analyst Nicola Mallard of InvestecSecurities said in a note.

Devro makes sales in euros, U.S. dollars and the yen, andincurs manufacturing costs in Australian and U.S. dollars andthe Czech koruna, as well as the pound. The company earns onlyabout 10 percent of its revenue in pound.

Devro shares were up 5.7 percent at 249 pence by 0859 GMT. ($1 = 0.6189 British pound) (Reporting by Aastha Agnihotri in Bangalore; Editing byGopakumar Warrier)