WH Smith extends share buyback as profits rise

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By Ahmed Aboulenein

LONDON, Oct 16 (Reuters) - British books, newspaper and stationery retailer WH Smith (LSE: SMWH.L - news) posted a 9 percent rise in full-year profit and announced a new 50 million pounds ($80 million) share buyback following a record outcome at its travel division.

Shares (Berlin: DI6.BE - news) in the firm, which also hiked its total dividend 14 percent to 35.0p, were up 4.2 percent to 1,037 pence at 0853 GMT, one of the biggest risers on the FTSE 250 midcap index.

WH Smith, which has over 1,300 stores, primarily in the UK, said on Thursday pretax profit for the year to end-August was 112 million pounds, up from 103 million a year ago and in line with market forecasts.

"Looking ahead, our focus will remain on profitable growth, cash generation and investing in new opportunities that position us well for the future," Chief Executive Stephen Clarke said.

WH Smith's long established pattern of declining sales accompanied by profit margin gains continued, with full-year total sales down 2 percent but margins up 160 basis points thanks to a more profitable product mix and tight cost controls.

Total sales at its travel arm, made up of outlets at airports, railways stations, motorway services, hospitals and workplaces, rose 4 percent, helped by improving passenger trends, sending trading profit up 11 percent to a record 73 million pounds.

"Despite operating in a market where some of its categories are under considerable pressure, we believe the company's attention to detail and diversification should ensure the strong track record of cash returns and earnings growth to continue," analysts at Barclays (LSE: BARC.L - news) said in a note.

WH Smith said it had found an additional 11 million pounds of cost savings over the next three years, bringing the total to 21 million, of which 11 million is planned for 2014-15.

It said it had also agreed to reduce its pension deficit funding to 3 million pounds a year from 14 million this year.

As part of a number of trials underway within the group, including franchise partnerships with local newsagents and a food-to-go trial in rail stores, WH Smith added it planned to trial a small number of standalone, value greeting cards stores.

The share buyback announced Wednesday of up to 50 million pounds follows the completion of a 50 million pounds programme announced in October 2013.

(1 US dollar = 0.6265 British pound) (Editing by Paul Sandle and Neil Maidment)