LONDON (Reuters) - Morrisons (L:MRW) beat forecasts with a 9 percent rise in first half profit after Britain's fourth biggest supermarket group delivered its best quarterly sales performance for nine years.
The Bradford, northern England, based firm said it was confident about the future, despite Britain's imminent departure from the European Union, raising its interim dividend by 11.4 percent and also paying a special dividend.
Morrisons shares have risen 23 percent so far this year. They were up 0.7 percent at 0732 GMT.
For the six months to Aug. 5 Morrisons made an underlying pretax profit of 193 million pounds - just ahead of analysts' average forecast of 192 million pounds and up from 177 million pounds made in the same period last year.
In its second quarter group like-for-like sales, excluding fuel and VAT sales tax, rose 6.3 percent - an eleventh straight quarter of growth, having risen 3.6 percent in the first quarter.
Chief Executive David Potts said second quarter sales were helped by Britain's record-breaking summer heatwave, the soccer World Cup and the Royal Wedding as well as the firm's own initiatives.
Potts, a former Tesco executive, joined Morrisons in 2015 to lead a recovery after it was badly damaged by the rise of discounters Aldi and Lidl in its northern heartland and the strategic errors of previous management.
He is broadening Morrisons' business by improving the performance of its nearly 500 UK stores while also pursuing growth in online and wholesale markets.
He has overseen a steady improvement in trading, driven by more competitive prices, improved product ranges and availability as well as better customer service in refurbished stores.
"Improvements in fresh produce, counters, private label, homewares and clothing augur very well for the business," said Bryan Roberts, global insight director at tcc global.
Potts has also overhauled Morrisons' online strategy through a renegotiated agreement with distributor Ocado (L:OCDO) and struck wholesale supply deals with Amazon (O:AMZN) and the McColl's (L:MCLSM) convenience business.
Since the half-year end the group has agreed new wholesale deals to supply MPK Garages forecourt stores and Big C in Thailand.
It said 700 million pounds of annualised wholesale supply sales were now expected to be achieved ahead of initial end-2018 guidance, with 1 billion pounds of annualised sales still expected in due course.
"We are confident that Morrisons has many meaningful and sustainable sales and profit growth opportunities ahead," said Potts.
In April Sainsbury's, Britain's No. 2 supermarket group, agreed a 7.3 billion pounds cash and shares takeover of Walmart's (N:WMT) Asda, the No. 3 - a combination that could overtake current market leader Tesco (L:TSCO) as Britain's biggest supermarket group.
While Morrisons would become No. 3 it would be about a third of the size of Sainsbury's-Asda and Tesco.
