The inevitable post-Covid sales hangover for Premier Foods failed to dent market optimism for the stock on Wednesday, as its shares surged on better-than-expected results and a beefed-up dividend.

The Bisto and Paxo owner’s trading profits for the year to 2 April of £148.3m beat expectations, which had already been hiked at the time of its third quarter trading update. The figure was flat year on year and 12% ahead of two years ago.

The bottom line outperformance came despite revenues at the group dropping 3.6% to £900.5m, as it started to lap its pandemic-driven growth, when customers were stockpiling household essentials during lockdowns. However, sales remained 6.3% higher than two years earlier.

Premier said strong branded growth drove volume and value market share gains for its grocery and sweet treats divisions, singling out Mr Kipling for having its best-ever year thanks to a series of new product launches and investment in marketing. Branded revenues increased almost 10% when compared with two years ago, while international sales jumped 25%.

Its outlook remained bullish despite the wave of cost inflation and difficulties facing households, as higher fuel bills kick in. Trading since year-end had been “encouraging” and it has seen market share gains as customers increasingly look for value meal solutions, Premier said.

In a further boost for investors, the group increased its dividend by 20% to 1.2p per share after paying its first dividend for 13 years last year.

Premier shares jumped 10.1% to 117.4p on Wednesday, and are now up 13.2% year on year, more than treble their pre-Covid 2020 levels.

Peel Hunt said Premier’s shares still offered “excellent value” despite the rebound “given the strong underlying revenue, market share and margin performance, combined with healthy cash generation and improving pension”. Jefferies said its outlook was “reassuring and confident” and the prospect for most bolt-on M&A activity was also a “positive development”.

However, AJ Bell cautioned: “While the Mr Kipling range has just enjoyed its best year ever, Premier Foods faces the risk shoppers will trade down to cheaper, own brand alternatives amid big pressure on household budgets… … Will consumers be prepared to pay more for the tastes they know and love?”