Sainsbury Posts Higher Profit In H1, Lifts Dividend; Stock Up

(RTTNews) - Shares of Sainsbury (J) Plc (SBRY.L, JSAIY.PK) increased around 4 percent in the morning trade after the supermarket chain reported Wednesday that its first-half profit increased from last year, benefited by higher sales and margin strength with cost savings. The company also lifted its dividend.

Chairman David Tyler stated that the company had a strong first half to the year, outperforming the market in what remains a tough trading environment.

For the 28 weeks ended September 28, pre-tax profit increased 9.1 percent to 433 million pounds from last year's 397 million pounds. The prior year results have been restated as a result of the amendments made to IAS 19 'Employee Benefits.'

The latest first-half results included a credit to one-off items of 36 million pounds as a past service credit net of compensation payments of 158 million pounds were partly offset by impairment and other charges, while prior year's results included charge of 3 million pounds.

Underlying profit before tax, which excluded items, was 400 million pounds, compared to last year's 374 million pounds.

Profit for the period attributable to owners of the parent was 340 million pounds, compared to 311 million pounds a year ago. Underlying basic earnings per share was 16.6 pence, compared to 15.2 pence a year ago.

Total sales, including value added tax or VAT and fuel, grew 4.4 percent to 13.95 billion pounds. Revenue excluding VAT, but including fuel increased 4.3 percent to 12.68 billion pounds.

Like-for-like sales including fuel rose 1.5 percent, benefited by strong performance from own-brand, non-food, convenience and groceries online segments, along with the warmer summer, despite a tough and competitive retail environment.

The company noted that the like-for-like increase was at the top end of its full-year guidance of 1 to 1.5 percent.

Sainsbury said its non-food segment delivered growth ahead of the market and twice that of the food business.

Underlying operating margin improved 7 basis points to 3.47 percent, benefited by continued effective cost control. The company said its operational cost savings was around 55 million pounds, and the company said that it is on track for around 100 million pounds savings for the full year.

Further, Sainsbury said its Board has proposed an interim dividend of 5.0 pence, a growth of 4.2 percent from last year.

Justin King, chief executive said, "Our share of the grocery market is the highest for a decade at 16.8 per cent following 35 consecutive quarters of like-for-like sales growth. … Whilst customers' budgets remain tight and any recovery in the economy may take time to take effect, our consistent strategy and strong values-driven culture mean we are well placed to continue to deliver for customers, colleagues and shareholders."

In London, Sainsbury shares are currently trading at 413.90 pence, up 15.10 pence or 3.79 percent.