Bakery specialist Finsbury Food Group Plc (LON:FIF) saw shares sink as it updated on trading in the first four months, saying its input costs were now sharply higher due to the weaker pound.
However, trading has been in line with expectations and consumer confidence has been higher than expected, said the firm behind Memory Lane Cakes, among others.
Group sales revenues were £101.5mln despite the established trend of UK retail food market deflation.
The UK Bakery division dropped 4% but the overseas division, the 50% owned European business, grew impressively - by 36.5%.
"The group continues to benefit from strong cashflow allowing elevated levels of investment to increase product innovation and importantly efficiency and productivity throughout the group," it noted.
This will allow the firm to continue to deal with known headwinds such as sterling induced commodity inflation and the planned national living wage increases, it added.
Shares fell 2.81% to 121p in early deals.