Expansion into new product categories has helped Warburtons deliver a sharp increase in sales and profits.

The family-owned baker said turnover had risen by 7.3% to £562.1m in the year to 28 September 2013, in accounts filed today on Companies House.

The strong performance drove a 52% increase in operating profit before exceptional items to £34.56m. 

Although the company saw raw material costs increase by 8.5% as a result of the rocketing price of wheat in 2012, this was more than offset by the increased turnover.

Warburtons said growth was achieved in spite of declining market volumes. The directors’ report stated that growth was achieved “despite the continuation of difficult, albeit improving, trading conditions and bakery market volume decline.”

Diversification into new product categories such as wraps and sandwich thins has driven the top line growth. “Our fifth generation family business continues to grow. The key driver of our revenue growth is, in particular, due to the increased sales of our new sandwich alternative products such as our first to market, sandwich thins,” said Warburtons chairman Jonathan Warburton.

“We remain committed to growth and diversification and continue to invest in our people, our innovation, our infrastructure and in new growth areas such as our free from business.”

The latest market data indicates the Warburtons sliced bread sales continue to struggle amid falling industry volumes, while growth in adjacent categories is strong. Warburtons bread sales have slipped 0.6% to £603.6m year-on-year, while its sales of baked goods have jumped 29.6% to £200.9m. [IRI 52 w/e 1 March 2014].

In March this year, Warburtons received planning permission for a new £20m plant in Burnley, Lancashire, which will provide extra capacity for the production of wraps and thins. It explained that sales of its sandwich alternatives had grown by 87% in 2013 and that it needed a specialist site to support future growth.