The rocketing price of cake ingredients reduced Finsbury Food's margins by £1.5m last year, but strong sales cushioned the blow, the company claimed in its trading update this week.

The own-label bakery supplier had eventually passed on rising costs to its retail customers, but the delay had taken its toll on margins.

However, Finsbury's subsidiary businesses performed well. Sales at Memory Lane and Lightbody have grown by 11% year-on-year. Bread maker Nicholas & Harris recorded a 19% sales lift while United Central Bakeries posted a 17% rise despite returning to full production just eight months after a fire put it out of action.

Although business would be tough in the next 18 months, sales would be buoyed by relaunches and continuing licence deals with Disney and Nestlé, said Finsbury CEO Dave Brooks.