Morrisons enjoys 10% profits rise

Chairman Sir Ken Morrison still hopes to buy Safeway

WM Morrison, the supermarket chain that is trying to buy Safeways, has reported a 10% rise in profits.

The family run chain says its profits rose to £126.2m ($202m) in the first six months of the year, while turnover increased by 15% to £2.5bn.

The strong results will strengthen its hand in the battle to buy Safeways.

The four UK firms in the race - Tesco's, Sainsbury's, Asda and Morrisons - will be told later this month whether their bid will raise concerns with the competition authorities.

Morrisons estimates the takeover bid will cost it £6.6m.

Inflation fears

Analysts believe Morrisons bid stands the best chance, while the other bids could be blocked.

"Anticipating the decision of the Competition Commission's enquiry into the Safeway bid is difficult, but I am confident that whatever the outcome we have the ability to prosper and extend our run of good results," chairman Sir Ken Morrison said.

The strong performance of Morrisons follows record results from rival supermarket Tesco earlier this week.

But food retailers are becoming slightly more cautious about future growth prospects.

And Sir Ken admitted that tough market conditions will prevail as the first signs of inflation in food prices set in after a long period of deflation.