Premier Foods suffered a mini sell-off this week as it reported an inevitable decline in sales and profits. As consumers returned to out-of-home eating, the business came up against last year’s Covid-elevated figures.

Shares slumped 5.8% to 107.6p as markets opened on Tuesday morning but recovered to 111p by the end of the day. The stock had fallen further to 106.6p by Thursday lunchtime.

Revenues dipped 6.5% to £394.1m in the six months to 2 October, while trading profits fell 12.2% to £57.8m. However, the top line was up 7.5% on a two-year basis, with profits up by 13.1%. Sales in the second quarter actually increased 0.4% year on year, lifted by a 2.1% rise in branded sales as the likes of Bisto, Oxo, Sharwood’s, Angel Delight and Paxo all performed strongly.

Analysts struggled to rationalise investor sentiment given Premier beat broker expectations and its own guidance.

Martin Deboo of Jefferies pointed to some caution in the second half to reflect industry-wide logistics issues and input cost recovery uncertainties. But this didn’t feel like a moment to be incautious around the food industry outlook this winter, he said. “Underlying growth rates remain robust and improved a tad at Q2, with Premier outperforming the wider UK grocery market in their second quarter.”

Charles Hall of Peel Hunt added: “The shares continue to look excellent value to us given the strong underlying revenue and margin performance, combined with healthy cash generation.”

Clive Black at Shore Capital called the results “very reassuring”.

He said: “Ahead of the important Q3 trading period, when we expect many households to have a good Christmas celebration, we are pleased in the face of recent supply chain issues to be holding our FY22 forecasts with a little beat to H1 sales expectations in tow.”

Black added that as Premier’s self-improvement continued, the stock remained “just too lowly rated compared to its peers”.

CEO Alex Whitehouse has presided over a stellar recovery in value for the group, with shares rocketing from a low of 19.7p in early March 2020, just before the pandemic saw its fortunes turnaround as households – and supermarket partners – turned to the reliable stable of trusted brands from Bisto and Oxo to Ambrosia and Mr Kipling to keep cupboards stocked during lockdown.

However, it would be unfair to give all the credit for the turnaround to Covid demand, with Whitehouse reviving stale brands and investing in marketing once more.

Elsewhere, shares in McColl’s collapsed by almost 30% to lows of 13p on Wednesday after issuing a profits warning as it struggled to source high-margin branded impulse lines like snacks, beer and wine amid supply chain chaos.