Premier Foods increased its annual profit outlook on Tuesday, as its grocery business witnesses strong demand and performance of its sweet treats segment improves in the fourth quarter, sending shares of the company up 9%.
The maker of Mr Kipling cakes and OXO cubes said it now expected adjusted profit before tax to be around £135 million ($162.84 million) for the year to 1 April, 10% higher than the prior-year figure.
Shoppers are likely to pay even more for groceries this year than they did in 2022, with grocery inflation hitting a record high of 17.1% in the four weeks to 19 February.
Shares of Premier Foods rose 9% to 125 pence, as of 0820 GMT.
The company expects its revenue growth in the fourth quarter to be 10% higher than the year-earlier period.
"The driver is an improving trend in volumes combined with the expected price increases, which is also helping margins," analysts at Peel Hunt said in a note.
The group, one of UK's largest food suppliers to retail and wholesale customers, in January said it would offset the high input cost inflation by raising prices annually and cutting expenditure.
Premier Foods sells a range of products — from plain flour to cakes and cooking sauces to quick meals — through supermarkets, convenient stores, and discounters as well as other channels mainly in the United Kingdom.