Premier Foods, the maker of Mr Kipling cakes and Bisto gravy, posted a 2.1 per cent rise in first half trading profit, though its sales fell, reflecting a tough market for its supermarket customers.

The company, which last month cut annual sales growth forecasts at its key brands due to Britain’s gloomy grocery market, said on Tuesday it was maintaining its trading profit expectations for the full year.

Premier Foods’ underlying trading profit for the six months to June 30th was £48.1 million, up from £47.1 million in the same period last year.

But its sales fell 6.1 per cent to £364.4 million, with its core higher-margin ‘power brands’ such as Bisto, Mr Kipling, Batchelors soup and Ambrosia custard, down 4.9 per cent to £240.8 million.

Lower volumes were offset in part by a raft of cuts to manufacturing and procurement costs.

The retailers who sell Premier Foods products are facing the slowest rate of growth in Britain's grocery market since 2005, illustrated by a profit warning from market leader Tesco on Monday.

"We are adapting quickly to the changing external environment through retaining a tight control of costs and margins and have a strong programme of consumer marketing and new product introductions planned for the second half of the year," said chief executive Gavin Darby.

“Assuming normal weather patterns, we expect an improved second half branded sales performance and our trading profit expectations for the year remain unchanged.”

Mr Darby added the firm remained convinced of the medium and long-term potential for its brands to deliver profitable growth.

Shares in the firm closed at 46.5 pence on Monday, down 14 per cent on a year ago, valuing the group at £383 million pounds.

Reuters