Greggs shares higher on profit recovery

LONDON, July 30 (Reuters) - British baker Greggs said profits recovered sharply in its first half, helped by better trading conditions and initiatives such as an improved sandwich range and a better coffee blend.

Shares (Frankfurt: DI6.F - news) in Greggs (Other OTC: GGGSF - news) , which with 1,661 shops has more outlets in Britain than burger chain McDonald's, rose 4.8 percent on Wednesday after it reported a profit before tax and one off items of 16.9 million pounds ($28.61 million) in the 26 weeks to June 28.

That was up from 11.4 million pounds in the same period last year.

Total (NYSE: TOT - news) sales rose 3.1 percent to 373 million pounds, while sales at stores open over a year increased 3.2 percent.

"Our first half performance has been good but has benefited from comparison with a period of weak trading last year and earlier phasing of property profits," said Chief Executive Roger Whiteside.

He said sales growth in July had continued to be strong as Greggs had not experienced the heatwave conditions that depressed sales last year.

This was expected to fall back in the months ahead as Greggs compares with better trading in the remainder of the year.

Greggs said input cost inflation had been lower than it expected, driven by ingredients and energy and it expected this to continue through the balance of the year.

In February the Newcastle, Northern England, based firm known for its pasties, sausage rolls and doughnuts, said it was looking more towards healthy eating.

Customers now spend more than 1 million pounds per week on the new "Balanced Choice" range containing products with less than 400 calories, and sales of the new coffee blend are also growing.

Alongside 131 shop refurbishments, the baker has closed 36 shops and opened 26, of which nearly all are in locations away from high streets, such as office areas and train stations, as well as in motorway service stations, enabled by a franchise partnership with Moto.

Shares in Greggs, up 21 percent over the last year, were up 24 pence at 523 pence at 0920 GMT, valuing the business at 507 million pounds. ($1 = 0.5907 British Pounds) (Reporting by Tess Little; editing by James Davey)