Shares in Morrisons were up on the FTSE 100 in morning trading after the supermarket chain reported a rise in turnover and pre-tax profit in the full year ended 31 December 2010.
Turnover increased seven per cent to £16.5 billion, while like for like sales excluding VAT and fuel rose 0.9 per cent.
Pre-tax profit in the period rose from £858 million to £874 million, while on an underlying basis pre-tax profits were up 13 per cent to £869 million.
Morrisons net debt fell in the period from £924 million to £817 million. The period also saw the group open 15 new stores and report record customer numbers.
The group said that it would be raising its total dividend 17 per cent to 9.6 pence per share and added that it is committed to double-digit dividend growth over the next three years.
Looking ahead Morrisons said that higher taxes, government spending cuts, inflation and rising unemployment will negatively impact consumer confidence and disposable incomes, making for a challenging year. Despite this Morrisons claimed it was "well positioned" to face the challenges posed by the current economic situation.
Dalton Philips, CEO of Morrisons, said, "2010 was a year of solid performance in the business, whilst we reshaped the top team and began a series of initiatives and investments to drive the business forward. Our plan to make Morrisons "Different and Better than Ever" has great momentum, with store trials under way that are yielding exciting results, our first convenience store sites secured and important e-commerce investments in FreshDirect and kiddicare.com announced."
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented "The numbers themselves were largely in line with expectations, and were somewhat overshadowed by the company's outlook statement.
"Sales and profits continue to move in the right direction, with Morrison's value offerings becoming increasingly attractive to a cost conscious consumer. From a strategic perspective, the company is beginning to plug its online offering gap, which will gain more importance as shopping habits equalise between physical and virtual visits to the stores. On the downside, the uncertainty caused by management reshuffles has provided something of a headwind on the shares, whilst the fierce competitiveness of the industry will remain a challenge.
"Management guidance accompanying the results was something of a double-edged sword. On the one hand, the outlook picture for this year was painted as cautionary, citing the difficulties of inflationary pressures, rising unemployment and general economic uncertainty in the UK. Set against this, the announcement of a share buyback programme is a positive statement of intent, even if the move was widely trailed in advance. The concomitant commitment to a double digit rise in the dividend over the next three years was also a clear expression of confidence.
"The business continues to make progress, but the shares have not necessarily kept pace. Over the last year Morrison's have suffered an 8% drop in the share price, as opposed to a gain of 5% for the wider FTSE100 in that period. Given that the age of austerity may yet play into its hands, the market consensus on balance remains that the shares are a buy."
By 09:45 shares in Morrisons were up 0.75 per cent on the FTSE 100 to 282.60 pence per share.