Shares in J Sainsbury were up over two per cent on the FTSE 100 after the supermarket chain smashed forecasts for its full year results.

In the full year to 20 March 2010 J Sainsbury saw its underlying pre-tax profit rise 17.5 per cent to £610 million. Analysts had expected a still substantial rise of just 10.5 per cent.

Total sales including fuel rose 5.1 per cent to over £21.4 billion. Like for like sales increased 4.3 per cent in the period.

Sainsbury said it would be proposing a full year dividend of 14.2 pence per share, up 7.6 per cent from the previous year. The group also said it would be paying 127,000 staff bonuses from a pool of more than £80 million.

The company said that the value of its property stood at £9.8 billion, up £2.3 billion from the previous year, thanks in part to extra investment and development. The group's net debt was reported as being over £1.5 billion.

Customer numbers at Sainsbury rose to 19 million per week, up one million from the previous year.

David Tyler, Chairman of J Sainsbury, said, "The Board is pleased with the performance of Sainsbury's over the last year. We have delivered sales growth ahead of the market and good profit growth with underlying earnings per share up over 12 per cent. Our progress in achieving our strategic objectives has been strong, particularly on growing space and developing our complementary non-food offer."

Justin King, Chief Executive, said, "Colleagues have worked hard to deliver operational excellence resulting in better service and further productivity savings which have contributed to 17.5 per cent growth in underlying profit before tax, a good performance in difficult trading times. I am delighted therefore that 127,000 colleagues will share a bonus of over £80 million. Our success has also meant that we have been able to invest over £900 million in capital expenditure in the year. This has added 1.1 million sq ft to our store estate, opening or extending over 100 stores and creating over 6,500 new jobs with Sainsbury's.

"Sainsbury's is a growing business with a strong balance sheet, valuable property assets and an improving return on capital. Our strong operating cash flows support our plans to accelerate the investment programme, delivering further trading and property value for shareholders. Whilst we expect that the environment will remain challenging and consumer spending will be under pressure, we believe our strong space growth plans, supporting our expanding food, complementary non-food and convenience store businesses, alongside our continued focus on productivity, will enable the business to make further good progress."

Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented, "These numbers may bring some brief relief to what has been an underperforming investment.

"The profit numbers year on year are impressive and top analysts' expectations, which has boosted the share price in early trade. Market share has increased, partially due to a larger convenience store presence, a strong TV advertising campaign and a continual focus on value products for cost conscious consumers. However, the UK version of an austerity package will soon emerge and there may be more economic ranges at other stores. Furthermore, the pension deficit which Sainsbury carries is an ongoing burden and the Qatari stake continues to be a technical drag on the shares.

"The company's outlook was understandably cautious although hopeful of further progress. Over the last year the shares have actually declined 4%, during which period the wider FTSE100 has added 25%. There may be some positive upgrades resulting from the numbers, but for the moment the shares remain a weak hold in market consensus terms."

By 10:18 shares in J Sainsbury were up on the FTSE 100 by 2.50 per cent to 336.20 pence per share.