Bakery chain Greggs said it was encouraged by results so far from a trial with retailer Iceland as it posted its interim results this week. The firm is five weeks into a 10-shop trial in Liverpool, where Iceland is selling its bake-at-home frozen sausage rolls in Greggs-branded four-packs.

Chief executive Ken McMeikan said the trial was set to continue for a further five weeks before the impact on Greggs’ own shop sales was assessed, but so far both retailers thought it was a "very encouraging start".

As Greggs announced results for the six months to 2 July, McMeikan said profits had been hit in the first half-year. Two bank holidays had cost Greggs between £1.8m and £2m, he said, including the unexpected Royal Wedding Bank Holiday, when 300-400 shops were closed all day.

Greggs had been hit by rises in commodity costs, he added, with a continuing impact likely to be felt in the second half. For example, Greggs had seen flour prices go up by 30% in the first half and expected the second half to be slightly better and energy prices had gone up 15-30% in the first half, with the second half expected to be worse.

As a "last resort", prices had been put up in the first half by "pennies" on various products, McMeikan said.

Greggs said pre-tax profits before exceptional items fell to £17.3m in the six months, down from £18.6m the year before. Total sales rose 4.2% to £335m.

Greggs opened 39 shops in the half-year period, bringing its tally up to 1,518 and is on track to open a net 80 outlets in 2011.