The UK’s fourth-biggest supermarket chain Morrisons has announced an 11% jump in full-year profits as it continues its turnaround programme.
The chain said it made underlying profits of £374m in the year to 4 February, up from £337m in 2016.
Like-for-like sales excluding fuel, which strip out stores open for less than a year, were up 2.8%.
The company said performance was “strong” despite the “challenges” of higher import costs..
Revenues rose by 5.8% to £17.3bn, up from £16.3bn.
Chairman Andrew Higginson said Morrisons was now entering its third consecutive year of growth.
The retailer also said it was “confident that a broader, stronger” Morrisons would continue to grow.
It announced a special dividend of 4p per share, taking the total full-year dividend to 10.09p per share, a rise of 85.8%.
It said it was “growing sales and profit” and expected growth to continue to be “meaningful and sustainable in the future”.
“The special dividend reflects our good progress so far and our expectations for continued growth,” it added.
Shares opened higher, but have subsequently fallen back.
One of the chain’s priorities is to become more competitive.
It said that during the year, the impact of lower sterling on imported food prices was a “headwind for the industry, but helped by being a British business with a largely British supply chain, we took this as an opportunity to become more competitive for customers”.
It said at Christmas, “despite the cost inflation pressures”, a basket of key items was the same price as the same time last year.
Last month, Morrisons announced it would cut 1,500 middle management jobs.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the special dividend would “put a smile on the face of shareholders, particularly against a backdrop of such challenging conditions for the sector”.
He said the supermarket’s largely British supply chain had helped to “keep prices competitive, in a market where the falling pound has increased the cost of imported food”, and that while margins had slipped slightly, “growing sales have helped bolster the bottom line”.
However, he added “much of Morrison’s bumper growth in profits can actually be attributed to lower finance costs, with net debt being trimmed back to under £1bn”.
In January, Morrison’s started to supply McColl’s convenience stores nationwide with both Safeway products and branded goods. It also due to supply about 40 SandpiperCI supermarkets in the Channel Islands.
Mr Khalaf said the retail sector was “polarising into winners and losers, as a result of tough trading conditions and changing consumer behaviour”.
“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.”