NORTH-EAST baker Greggs expects to report a surge in operating profits by up to £5.5m at the end of this month as its turnaround plan starts to take hold, it announced this morning.

In a trading update the Newcastle-based company said total sales for the 26 weeks to June 28 rose by 3.1 per cent, while like-for-like sales in its shops grew by 3.2 per cent.

The encouraging numbers led the pasty and pie maker to predict that half-year profits would be about £16m to £17m, compared with £11.5m in 2013, but it admitted the impressive year-on-year performance had benefitted from comparison with a period of weak trading last year.

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It completed 131 shop refurbishments, which was in line with its plan to refit 200 shops during 2014. During the period Greggs opened 26 new shops and closed 36 shops, giving a total of 1,661 outlets trading.

"Given the encouraging trading performance in the first half of the year, along with good cost control and the benefit of property disposal profits, we expect to show operating profits of around £16-17m when we report our interim results on 30 July. Overall, we expect to deliver an improved financial result for the year and further progress against our strategic plan," it said.

Greggs has disposed of a number of surplus freehold properties in the year to date realising property profits of £1.4m compared to £0.2m in 2013.