The retailer, which in April lost its highly regarded chief executive John von Spreckelsen to struggling rival Somerfield, said pre-tax profits in the year to 30 April were £14.6m, up from £12.6m in the previous financial year.
Budgens, which has 208 stores and about 0.6% market share, was due a boost. In the past six months its shares have underperformed the rest of the sector by 13% and the all-share index by 10%.
Like-for-like sales, the key measure of how a supermarket group is performing, were up 4.1%, compared with an industry average of about 1.7%, despite deflationary pressures in food prices.
Group turnover was up 4.5% at £451m, compared with £440m last time.
Going local
On Monday, the company launched a new franchise concept to target smaller independent stores and corner shops, called Budgens Local.
It also said it was to abandon its 24-hour format, developed when the group bought 55 stores from the 7/11 chain three years ago with the intention of rebranding them Budgens Express.
During the year, the group increased its sales of organic products, boosting turnover of these items by 300%, albeit from a small base.
Budgens also aims to open 20 new stores during the current financial year, but new chief executive Martin Hyson said the chain was unlikely to expand out of its heartlands.
The chain is is currently focused in the south, Midlands and Wales, with its most northerly store located in Lincolnshire.
"If an opportunity arose that was a reasonable one, we would take it, but we are not going to be jumping Hadrian's Wall just yet," Mr Hyson said.
Fresh food sales, he said, now accounted for 37% of sales.
Petrol sales
Budgens' petrol forecourt profile is set for expansion this year. A 12-store trial with petrol retailer Jet, which has been running since the start of the year, is due to finish this month.
Mr Hyson said it was likely to lead to a further expansion. The chain already has alliances with Kuwait Petroleum, with stores on a number of Q8 forecourts, and Total, and predicted it would be operating from 41 sites by the end of the year.
Mr Hyson forecast that market conditions in the food retail sector would stay tough in the coming year, particularly on pricing, where the takeover of Asda by US giant Wal-Mart had resulted in a highly competitive pricing market.
Budgens will pay shareholders a total dividend of 2.2 pence per share, up 19% from last year's 1.85p. The share closed up 1.5p at 64.5p.