July 31, 2018 / 10:54 AM / 10 months ago

UK baker Greggs reassures investors with resilient first half

LONDON, July 31 (Reuters) - Greggs reiterated its full-year profit forecast on Tuesday, sending shares in the British baker higher after a push into healthier foods helped confound fears that the warm weather would put customers off its hot meals and drinks.

Shares in Greggs had plunged in May when it cut its full-year profit forecast, and an unexpectedly warm summer had raised fears that the group could struggle to shift hot food and drinks at the same rate from its nearly 1,900 outlets.

But Greggs said on Tuesday it was sticking to its forecasts of delivering underlying profit before exceptional costs at a similar level to 2017, sending its shares up 7 percent.

Greggs, which sells sandwiches, sausage rolls and pastries, is transforming itself from a conventional bakery business into a broader takeaway food retailer. The group said its value meal deals, healthier options and breakfasts were all selling well.

For the first half, the group’s total sales rose 5.2 percent to 476 million pounds ($626 million) while underlying operating profit fell 7 percent as the cold weather at the start of the year, and the warm weather in the summer, deterred some shoppers.

The warm weather also affected agricultural yields and higher energy prices provided an additional cost headwind, weighing on the company’s underlying margins, it said.

“Greggs has delivered a resilient performance despite challenging market conditions,” Chief Executive Roger Whiteside said in a statement. ($1 = 0.7603 pounds) (Reporting by Maria Gabriel; Editing by Susan Fenton)

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