30th Jul 2019 08:29
(Alliance News) - Baker Greggs PLC on Tuesday declared a special dividend following what it described as an "exceptional" interim trading performance.
However, looking ahead, the FTSE 250 company has warned on future food costs and the impact of planned investment into the business. Shares were 5.8% lower Tuesday in early trade in London at 2,246.53 pence each.
Greggs will return 35.0p per share to shareholders in the special payout. This is on top of an interim dividend of 11.9p, 11% higher than the year prior.
The enhanced payout comes as Greggs's pretax profit for the 26 weeks to July 29 climbed 52% from a year before to GBP36.7 million, with underlying pretax profit rising 58% to GBP40.6 million.
Total sales increased 15% to GBP546 million, with company-managed like-for-like sales rising 11%.
"Greggs has delivered an exceptional first half performance, building on the strong finish to 2018," said Chief Executive Roger Whiteside.
"We have continued to make strategic progress with our programmes of investment in infrastructure to support future growth and in developing the products and channels to market that will help achieve our ambition to be the customers' favourite for food-on-the-go."
The strong trading result was boosted by the new vegan sausage role, while traditional favourites also have sold well.
Looking ahead, Greggs does expect like-for-like sales growth to normalise over the second half due to some strong comparatives, and over the full year it sees higher food input costs than a year before. This will mean cost inflation will come in at the top end of Greggs's expectations.
"Given the strength of our year to date and the outlook, we have decided to increase investment in strategic initiatives in the second half of the year to help to deliver an even stronger customer proposition and further growth in the years ahead," said Greggs.
"These additional investments will offset the higher returns from our ongoing strong momentum, and therefore we maintain our previous expectations for underlying profits for the year as a whole. At the same time the strength of our financial position is allowing us to deliver enhanced returns for shareholders."
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