Britain's Morrisons returns to profit growth as sales rise

LONDON, Sept 15 (Reuters) - Morrisons, Britain's No. 4 supermarket, reported a rise in first-half profit for the first time in four years and a third straight quarter of underlying sales growth, indicating its recovery is gaining momentum.

The Bradford, northern England, based group, which trails market leader Tesco (Frankfurt: 852647 - news) , Sainsbury (Amsterdam: SJ6.AS - news) 's and Wal-Mart's Asda in annual sales, said on Thursday it made an underlying pretax profit before restructuring costs of 157 million pounds ($208 million)in the 26 weeks to July 31.

That was 11 percent up from last year's 141 million pounds and ahead of analysts' average forecast of 150 million pounds.

Sales at stores open over a year, excluding fuel, were up 2.0 over the second quarter, having increased 0.7 percent in the first quarter.

Net (LSE: 0LN0.L - news) debt reduced by 477 million pounds to 1.27 billion pounds - below the firm's year-end target, while the interim dividend was raised 5.3 percent to 1.58 pence.

Morrisons also raised its targets for cost savings, free cash flow and working capital improvement. ($1 = 0.7553 pounds) (Reporting by James Davey; editing by Kate Holton)