Morrisons expected to post big rise in pre-tax profits

Analysts forecast a 12 per cent rise in full-year pre-tax profits to £861m in the year to January 31, up from £767m the previous year.

The UK’s fourth biggest chain defied the bad weather over Christmas and beat City expectations by posting one per cent like-for-like sales growth, excluding fuel and VAT.

Chief executive Dalton Philips said the company had risen to the “twin challenges” of a difficult consumer environment and a prolonged spell of poor weather.

The supermarket has struggled to gain market share as rival Sainsbury’s goes from strength to strength in its drive to overtake second-placed Asda.

According to industry figures, Morrisons maintained its market share at 12.3 per cent in the 12 weeks to February 20, while Tesco and Asda slipped and Sainsbury’s grew.

The City will be looking for further guidance on commodity price pressures, which have hit food companies such as Unilever and Nestle in recent months.

Morrisons took the first major step in its e-commerce strategy last month with the acquisition of online retailer Kiddicare for £70m.

The supermarket group said it will use the kiddicare.com platform and management team to build an online non-food business.

Analysts will be looking for any plans to develop the online operation to cover its core food business, as it is the only one of the Big Four grocers not to have a significant internet business.

Similarly, an update on the trial of new convenience stores will be expected.

However, Kate Calvert, retail analyst at broker Seymour Pierce, said: “We suspect Morrisons’ performance will turn out to be the weakest of the majors.”

A blue-chip insurer will also deliver its full-year results as the industry’s reporting season gets into full swing.

Among other companies reporting results this week, Prudential is expected to post operating profits of £1.7bn, up 20 per cent from £1.4bn, in its annual results on Wednesday after a year dominated by talk of its expansion in Asian markets.

The insurer recently revealed its intention to double the 2009 value of new business profits in Asia – which were £713m – by 2013.

The rapidly-expanding economies of South East Asia are ripe for growth as the penetration of insurance products remains low in comparison with developed countries.

The company is still looking to rebuild bridges with the City following its abortive bid to land the Asian arm of US group AIG last year.