Greggs raises year guidance on strong first half

LONDON, July 29 (Reuters) - British baker Greggs raised its full-year guidance for the second time in three months after posting a 51 percent rise in first half profit that reflected favourable market conditions and well received improvements to its products and shops.

Newcastle, northern England, based Greggs (Stuttgart: 41G1.SG - news) , which sells sausage rolls, sandwiches and pastries from 1,664 retail outlets, said on Wednesday it made a profit before tax of 25.6 million pounds ($40 million) in the 26 weeks to July 4, up from 16.9 million pounds in the same period last year.

"We are confident of delivering a year of good growth slightly ahead of our previous expectations," said Chief Executive Roger Whiteside.

Prior to Wednesday's update analysts were on average forecasting a 2015-16 pretax profit of 67 million pounds according to Reuters data, up from 58.3 million pounds in 2014-15.

Greggs' total sales increased 6.4 percent to 398 million pounds in its first half, with sales at owned shops open over a year up 5.9 percent.

Whiteside noted significant growth in breakfast sales as well as from the extension of a range of sandwiches and flatbreads with fewer than 400 calories.

He also highlighted good customer reaction to Greggs' shop refurbishment programme that saw 118 refits and 12 cafe conversions.

Shares (Berlin: DI6.BE - news) in Greggs have increased 138 percent over the last year, hitting a record high of 1,216 pence in June.

The stock closed at 1,184 pence on Tuesday, valuing the business at 1.2 billion pounds.

In April Greggs announced a 20 million pound special dividend in light of its strong cash position.

On Wednesday it said it would pay an ordinary interim dividend of 7.4 pence, up from 6 pence last time. ($1 = 0.6409 pounds) (Reporting by James Davey; editing by Sarah Young)