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Finsbury Food has warned that conditions in the grocery market remained 'challenging' Reuters

Bread and cake firm Finsbury Food has reported a rise in profits for the six months ended 31 December.

Profit before tax rose 5.3% from the same period a year earlier to £7.9m ($9.8m), with chief executive John Duffy crediting the increase to investments made by the company to diversify business.

Revenues were flat at £156.6m.

"We have delivered a strong first half performance and this demonstrates the benefits of the group's investment and strategy implemented over prior years and reinforces our approach to innovation and diversification across our channels, customers and products," Duffy said.

"Our balance sheet remains solid, positioning the business well for future investment and the resulting benefits."

However, Finsbury warned conditions in the grocery market remained "challenging", with increased commodity prices and the weakness in the pound adding to input cost pressures.

"Well documented market challenges persist, however the group has prepared well and is continuing to work hard to mitigate against these," Duffy added.

Finsbury also announced that it would be launching a new range of cakes with Mary Berry in the second half of this year.