UPDATE 1-Devro to cut sausage skin production as demand falls

* Demand uncertain in UK, United States, eastern Europe

* Pretax profit falls 4.5 pct

* Shares fall as much as 9 pct

(Adds details; updates share movement)

March 4 (Reuters) - Devro Plc DVO.L , facing uncertain demand for its sausage casings, said it would cut production this year to run down inventories built up in anticipation of higher sales.

Shares in the company fell as much as 9 percent on Tuesday morning, making them the top percentage loser on the FTSE-250 Midcap Index .FTMC .

Devro, which makes skins for German bratwurst and British breakfast bangers, said demand for its edible collagen casings was "flat or diminished" in developed markets.

The company also reported a 4.5 percent drop in full-year pretax profit.

Devro said the volume of sausages sold in the UK declined 5 percent in 2012-2013, as pork prices rose and consumers cut spending. The company also reported a drop in demand from Australia and eastern Europe.

Pretax profit fell to 37.5 million pounds ($62.7 million) for the year ended Dec. 31. Revenue rose marginally to 242.7 million pounds.

Devro said 2013 profit was also hurt by rising raw material costs and manufacturing issues at its plant in the United States.

The company said the use of "markedly different technology" at its 35-year-old Sandy Run plant in South Carolina was responsible for a 2-million-pound hit to full-year profit.

Devro said it expected sales to rise this year in Germany, China, Japan and parts of Latin America.

"The outlook for other important markets, such as the UK, Russia, USA and Australasia, is less clear," the company said.

"In order to limit any further increase in the inventory levels that had been increased during 2013 in anticipation of stronger demand in 2014, Devro will lower production volumes during the year to balance short-term supply and demand."

Devro also said it planned to invest 50 million pounds in the construction of a plant in China. The company currently has plants in Scotland, the Czech Republic, the United States and Australia.

Devro recommended a final dividend of 6.10 pence per share, taking its total full-year dividend to 8.80 pence.

Shares in the Moodiesburn, Scotland-based company were down 7.4 percent at 282.4 pence at 0900 GMT on the London Stock Exchange.

($1 = 0.5982 British pounds)

(Reporting by Noor Zainab Hussain in Bangalore; Editing by Robin Paxton)

((noor.hussain@thomsonreuters.com)(Within UK +44 20 7542 1810)(Outside UK +91 80 6749 2764)(Reuters Messaging: noor.hussain.thomsonreuters.com@reuters.net))

Keywords: DEVRO RESULTS/