Own label ready meals supplier Oscar Mayer grew sales by over 5% last year as strong demand from key customers helped negate the “challenging marketplace” in UK grocery.

The supplier of chilled ready meals and convenience foods to major supermarkets such as Sainsbury’s, Waitrose and Morrisons, saw sales grow by 5.3% to £253m in the year to 26 March 2016.

Its higher sales were achieved via volume growth, which mitigated price inflation in raw materials and energy costs that emerged during the year.

Oscar Mayer said its “strategy of working closely with its customer base and focussing on defined product areas” enabled it to improve its gross margin from 20% to 21%.

Improvements in distribution efficiencies were dragged by increases in administrative expense, but the group still grew operating profits by 22.8% to £21m.

Pre-tax profits were up 23% to £21.1m.

Headcount grew during the year from an average of 2,707 people to 2,996 as the company increased its manufacturing employee base.

During the year it invested £6.4m in capital equipment and had a cash surplus of £0.3m, down from £2.4m last year.

The company accounts stated: “Despite the challenging retail environment, the directors consider that the performance of the business continues to be satisfactory and that its lack of borrowings and tight working capital management will stand it in a good position to take advantage of any opportunities which arise over the forthcoming year.”

During the year dividends paid to owners the Bigwood family rose by £10m to £13m.