Greggs plc (LON:GRG) has reported a dip in its underlying operating profits in the first half of the year as restructuring costs bit into its earnings.
The FTSE 250 bakery chain reported that pre-tax profits including the property profits and exceptional charge rose to £24.1mln from £19.4mln while like-for-like sales in company managed shops and total sales in the period also increased by 1.5% and 5.2% to £476mln respectively.
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However, underlying operating profits (excluding property disposal profits and exceptional charges) fell to £25.7mln from £27.6mln in the same period last year.
The group said it had incurred a £1.9mln exceptional pre-tax charge in relation to a restructuring programme announced previously, although this had reduced from £8.3mln in the same period last year, while it also upped its interim dividend to 10.7p from 10.3p last year.
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The low LFL sales growth may come as little surprise to investors following a trading update in May in which the company said severe weather over March coupled with weaker customer footfall had impacted trading at the start of the year, leading to a prediction of flat underlying profits for the full year.
In its outlook, the company remained cautious in relation to its sales outlook for the year, although added that it was confident of medium and long-term growth for the business.
Roger Whiteside, chief executive of Greggs, said the company had delivered a “resilient performance despite challenging market conditions”, but added that the group still expected underlying profits before exceptional costs would be “at a similar level to 2017”.
Commenting on the outlook, analysts at City broker Shore Capital said that the fact management had not provided a current like-for-like trading figure was "a particular concern given Greggs has traditionally struggled in very hot weather", but added that the reiteration of outlook despite the challenging trading environment had brought "modest comfort".
In mid-morning trading Tuesday, Greggs shares were up 7.3% at 1,032p.
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