SAUSAGE skin manufacturer Devro has reported a second successive quarter of volume growth as it continues its comeback from a challenging first half.

Glasgow-based Devro, which makes collagen casings for food producers around the world, said trading for the period from July 1 to date had been in line with expectations.

It highlighted progress in key markets Japan, China and Germany amid improving demand and an expected reduction in stock levels, and noted projects to build new manufacturing facilities in China and the US were proceeding to plan.

Shares closed up 14.5p, or 6.16 per cent, at 250p on the update after plunging to a year-low of 210p in May, just three months after reaching 324.8p in February.

The fall came as the firm announced plans to axe 130 jobs in Moodiesburn and Bellshill as it streamlined its manufacturing operations in Scotland.

Devro, which said the restructure was designed to cut unit costs and decommission older technology, confirmed the first staff affected by the redundancies have started leaving the business.

The restructuring in Scotland caused £9.6m of the £10.8m of exceptional items booked by the firm in the six months ended June 30, and sent pre-tax profits tumbling to £1.6m from £16.2m.

The company, which stated in July that more than 100 of the proposed redundancies had been voluntary, will have around 400 staff in Scotland after the restructuring. It has a workforce of 2,200 in five sites around the world.

Devro said it completed the first phase of the operational restructuring in August, with phase two scheduled to be finished by the end of the first quarter of 2015.

It also noted in a trading update that a combined £90 million investment in new production facilities in China and the US were proceeding according to plan.

The company is replacing its existing factory in South Carolina to address the underperformance of the existing site, and has embarked on an 18-month transition to the new manufacturing facilities. In China, it is hoping to bring a new site into commercial production in 2016. Net debt to fund the two projects is rising in line with expectations, the company said. House broker Investec said it expects the company's net debt to be about £85 million at the end of the year.

Analyst Nicola Mallard said the broker had not changed its forecasts for the year, nor its target price of 276p per share, and maintained its recommendation to buy.

It has pencilled in pre-tax profits of £28.4 million for the full year, with revenue of £230 million.

Last year the company made pre-tax profits of £41 million on turnover of £242.7 million.

Ms Mallard described the Devro update as "solid", "with continued positive momentum in volumes recorded in the quarter".

She said: "Work continues on upgrading/updating the manufacturing base, removing older lines in Scotland while new builds are under way in the USA and China.

"The group's capacity is now coming more into line with demand and inventories are reducing."

Devro chief executive Peter Page purchased 20,000 ordinary shares in the company yesterday at a price of 247.32p per share. The transaction took his stake to 662,440 shares, or 0.397 per cent of the issued share capital. Non-executive director Paul Withers acquired 20,000 ordinary shares at 247.717p per share, lifting his stake to 90,000 shares, or 0.054 per cent of the issued share capital.