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Sainsbury's profits soar

14/11/2007

Supermarket group J Sainsbury has reported a 27 per cent rise in first-half underlying pre-tax profits.

In a statement today the retailer confirmed that its underlying profit before tax climbed to £240 million in the 28 weeks to October 6th, up from the £189 million reported for the first half of last year.

The forecast-beating result comes after a Qatari-based investment firm announced last week it had abandoned plans to make a £10.6 billion takeover bid for Sainsbury's.

Delta Two said deteriorating conditions on the credit markets and concerns about future funding arrangements for Sainsbury's pension schemes were behind the decision to end its interest in the retailer.

But the UK's third-biggest supermarket stressed today that despite being shunned by its former suitor, it remained "wholeheartedly" focused on delivering against the company's targets.

Sainsbury's revealed its like-for-like sales, excluding fuel, lifted by four per cent over the first half. The company stressed the positive result was achieved despite tough comparatives from the previous year's trading and the "challenging" weather conditions experienced over the summer.

The grocer, which says it now has 16.5 million customers each week, reported it is ahead of sales target plans as a result.

Under the Making Sainsbury's Great Again three-year recovery plan, announced by the retailer in 2004, the company said it intended to grow sales by £2.3 billion.

However the supermarket now expects to achieve sales growth of £2.5 billion by March 2008 and says it is confident new three-year plans announced in May this year will provide the company with a "substantial opportunity" to further develop its business.

Commenting on the results in the wake of the failed Delta Two takeover, J Sainsbury chief executive Justin King said: "Everyone at Sainsbury's has been focused on serving customers better despite the potential distraction of corporate activity and these results are a credit to the hard work and commitment of our 150,000 colleagues."

He added while there were currently "tighter constraints" on consumer spending, Sainsbury's had a strong Christmas offer and was in a "significantly stronger" position than it had been at the launch of its three-year recovery plan in 2004.

Sainsbury's announced a 25 per cent increase in its interim dividend payment, to 3p.