DEVRO, one of Scotland's flagship food producers, has said growth is on track despite slower trade in the UK and a setback in manufacturing efficiency.

The global producer of sausage skins and other collagen products, based in Moodiesburn near Glasgow, told shareholders at the annual meeting yesterday that sales had continued to grow in 2013.

Steve Hannam, chairman, said: "This has been underpinned by good growth in much of Europe and North America, offset by a slower start in the UK and Australia."

He said the group's Select range of products, created as an alternative to sheep gut and a key plank of the growth strategy, had begun the year well, particularly in the demanding market of Germany where it continued to make good progress.

Mr Hannam said: "The major capital investment programme in the Czech Republic is proceeding as planned, with significant additional volume scheduled to come on stream in the second half of this year in order to support further growth in 2014."

The planned price rises, signalled in February, had now been implemented, and input costs had also risen broadly in line with the group's expectations.

"Manufacturing performance, however, has been held back by lower yields, particularly in the USA, which has restricted products available for sale and impacted unit costs," Mr Hannam said. That had pushed first-quarter profits lower than in 2012, but he offered reassurance that "remedial action has been taken and, with the benefits of recent price rises, additional volume from extra capacity and a focus on improving production processes, we do expect stronger performance as the year progresses".

The chairman said he was confident Devro would meet full-year expectations and its financial position continued to be strong.

Shares slipped 11.6p to 324p.