UPDATE 2-Devro posts higher H1 profit, shares rise

* Says improved performance to continue in H2

* Maintains interim dividend at 1.425p/shr

* Shares rise as much as 12 pct to 52-week high (Recasts, adds FD, analyst comments, share movement)

By Kumar Alagappan

BANGALORE, Aug 4 (Reuters) - British sausage-skin maker Devro Plc (DVO.L) on Tuesday posted solid first-half results helped by strong volumes and higher pricing, and expected the performance to continue through the second half, sending its shares up to a 52-week high.

Devro said its adjusted operating profit rose 18 percent for the period, driven by higher selling prices and increased meat consumption in emerging markets, but was hit by high energy and hide costs.

However, Devro, which makes collagen products for the food industry, expected these input costs to come down in the second half.

"We expect that (costs) will improve in the second half and that will not be back to the 2008 levels," Finance Director Peter Williams told Reuters.

The company said it would benefit from the continuing high cost and reduced availability of gut casings as more manufacturers were converting to Collagen from gut.

Williams said the outbreak of swine flu virus had not affected the company's business.

Investec Securities analyst Nicola Mallard, who has a "buy" rating on Devro stock, raised her price target on the stock to 117 pence from 110 pence.

"The stock is trading at an undeserved discount to its peers," Mallard wrote in a note.

Devro reported an operating profit before exceptional items of 10.4 million pounds ($17.6 million) for the six months ended June 30, up from 8.8 million pounds a year ago.

Pretax profit more than doubled to 11 million pounds, while pretax profit before exceptional items rose by 17 percent to 9.2 million pounds.

Revenue grew 27 percent to 105 million pounds, it said.

Devro said it maintained its interim dividend at 1.425 pence per share.

Net debt at the end of the first half reduced by 15 percent to 29.2 million pounds.

Devro shares were up 6.1 percent at 109 pence by 1355 GMT on the London Stock Exchange. They touched a new 52-week high of 112.5 pence earlier in the session. ($1=.5908 Pound) (Editing by Jarshad Kakkrakandy and Gopakumar Warrier)