Sainsbury's Announce 20 Per Cent Rise In Profits

Wed, 14 Nov 2007

Supermarket chain Sainsbury’s has this morning reported a 27 per cent rise in first-half underlying pre-tax profits, beating City forecasts in the wake of the failed £10.6 billion takeover proposal from Delta Two.

In a statement today the retailer confirmed that its underlying pre-tax profit has risen from £194 million to £232 million in the six months to October 6th (City consensus predicted profits at £231 million).

Like-for-like sales were up four per cent excluding fuel and gains from new stores opened in the first half of the year, while total sales rose 4.7 per cent to £9.9 billion.

The forecast-beating result comes after last week’s announcement of a collapse in the £10.6 billion takeover bid from Qatari-based investment firm – Delta Two, which caused shares in the supermarket group to plummet.

Sainsbury’s stressed the positive result was achieved despite tough comparatives from the previous year's trading and this summer’s poor weather conditions.

The UK’s third largest supermarket retailer, with around 16.5 million loyal weekly shoppers, reported it is ahead of sales target plans as a result.

Sainsbury’s has now achieved £2.3 billion towards a £2.5 billion sales growth target set in place by chief executive Justin King in 2004, as part of his ‘Making Sainsbury's Great Again’ three-year recovery plan.

New rolling targets are set at a sales growth of £3.5 billion between March 2007 and 2010, driven by the opening of 30 new supermarket stores, 75 extensions and 190 refurbishments on current stores .

Mr King commented: "While there are tighter constraints on current consumer spending, we have a strong Christmas offer and the company is significantly stronger than it was when we launched our Making Sainsbury’s Great Again plan in 2004."

The chief executive added that he was not disappointed that Delta Two's bid for Sainsbury's had failed to materialise.

Delta Two cited the current credit crunch and concerns about future funding arrangements for Sainsbury's pension schemes for its decision to walk away from the multi-billion pound deal .