LONDON (Reuters) - British baker Greggs (L:GRG) raised profit guidance for 2016 after a strong Christmas but cautioned that it faced greater uncertainty in the trading environment in 2017 with increased pressure on real income growth.
Greggs, which sells sandwiches, sausage rolls, bakes and pastries, also said on Tuesday it continued to expect some industry-wide cost pressures in 2017 and these were likely to have a modest impact on margins in the short term.
Prior to the update, analysts were on average forecasting an underlying pretax profit of 78 million pounds for 2016, according to Reuters data, up from the 73 million pounds made in 2015.
"Over the medium term we are confident of making further progress," said Greggs.
The Newcastle, northern England, based firm, said sales at company-managed shops open over a year rose 6.4 percent in its fiscal fourth quarter to Dec. 31, aided by a favourable festive trading pattern.
That compared to third quarter growth of 2.8 percent and took like-for-like sales growth for the full 2016 year to 4.2 percent.
Greggs, which trades from 1,764 retail outlets in the UK and sees scope for substantially more than 2,000, is transforming itself from a traditional bakery business to focus on Britain’s more than 6-billion-pounds a year market for food-on-the-go.
Shares in Greggs, flat over the last year, closed Monday at 1,001 pence, valuing the business at 1.02 billion pounds.
