Morrisons reported first-half profits towards the top end of forecasts and said it is on track to meet expectations although it anticipates no let-up in pressure on the consumer.
Bradford-based Morrisons, which trails Tesco, Asda and Sainsbury’s by annual sales, said it made an underlying profit of £445m in the six months to July 29.
This compares with analysts’ forecasts of £416m to £450m, with an average forecast of £434m.
The figure was up one per cent on the £442m made in the same period last year.
Morrisons said sales at stores open at least a year, excluding petrol and VAT sales tax, fell 0.9 per cent. That was better than a fall of 1.0 per cent in the first quarter and compares with analysts’ average forecast of a fall of 0.8 per cent.
Total first-half sales increased 2.3 per cent to £8.9bn.
Industry leader Tesco is seeking to recover from a shock profit warning in January by increasing promotional activity.
Latest industry data from Kantar Worldpanel showed Morrisons lagging the sales growth of its three big rivals as well as smaller players such as discounters Aldi and Lidl, though this is partly explained by Morrisons lower level of store openings.
“We expect the challenging economic environment and consumer pressures to continue through the second half of this year and into 2013 and we have developed our financial and operational plans accordingly,” the firm said.
“Notwithstanding these conditions, the board believes the group will meet its expectations for the year.”
Morrisons is paying an interim dividend of 3.49p, up 10 per cent.
Morrisons’ shares, down four per cent over the last year, closed on Wednesday at 279p, valuing the business at £6.75bn.