Morrisons profits jump despite cost rises
Morrisons, the UK's fourth-biggest supermarket, said annual profits jumped 11% as its turnaround programme continues.
The chain made underlying pre-tax profits of £374m in the year to 4 February, £37m higher than in 2016.
Like-for-like sales, which strip out stores open for less than a year, were 2.8% higher excluding fuel.
The retailer said performance was strong despite the "challenges" of higher import costs.
Revenues rose £1bn to £17.3bn and chairman Andrew Higginson said Morrisons was now entering its third consecutive year of growth.
However, by late morning, shares were trading about 3.7% lower. ETX Capital analyst Neil Wilson said there was a "sense that this kind of growth will be difficult to maintain, but this has been the argument for some time and has continually been wrong".
Morrisons announced a special dividend of 4p per share, which the firm said reflected its good progress and expectations for continued growth.
One of the chain's priorities is to become more competitive. At Christmas, it said a basket of key items was the same price as the same time last year despite higher costs.
Last month, Morrisons announced it would cut 1,500 middle management jobs.
Laith Khalaf, a Hargreaves Lansdown analyst, said the supermarket's largely UK supply chain had helped to "keep prices competitive, in a market where the falling pound has increased the cost of imported food".
Although margins had slipped slightly, he said rising sales had helped bolster the bottom line, with the higher profits attributed to lower borrowing costs.
Mr Khalaf added: "Morrisons is carving out a place in the winner's camp. On top of improved performance in its retail outlets, the group is also laying the foundations of a wholesale business, with deals in place to supply McColl's newsagents, as well as the expanding Amazon Prime grocery offering."