Morrisons profit up - but predicts tough 2012

Britain's fourth-biggest grocer Wm Morrison said the UK grocery market was likely to remain subdued in the coming year despite easing inflationary pressures as it posted a eight per cent rise in year profit.

"We expect a challenging year in 2012," the firm said on Thursday, adding that it still expected to deliver profitable growth.

Morrisons, which trails Tesco, Wal-Mart's Asda and J Sainsbury in UK market share, posted a profit before tax and one-off items of £935m in the year to 29 January, helped by a focus on fresh foods and low prices.

That compared to analysts' average forecast of £922m according to a company poll, and £869m made in the previous year.

Turnover rose seven percent to £17.7bn, with sales at stores open at least a year up 1.8 per cent, excluding fuel and VAT sales tax.

Britain's retailers are mostly struggling as shoppers are hit by rising prices, muted wages growth and government austerity measures, and worry about a stagnant housing market, job security and the impact of the euro zone debt crisis.

Morrisons, which runs nearly 500 superstores and unlike rivals produces much of the food it sells, has been modernising its core chain as well as diversifying into non-food, e-commerce and convenience stores through trials of the M-Local sub-brand.

The firm raised its dividend by 11 per cent to 10.7 pence a share.