The Safeway takeover weighed on Morrisons finances

Pre-tax profits for the 25 weeks to 23 July came in at �134.2m ($253m), against a �82.1m loss a year ago.

The Bradford-based group said it was now seeing the benefits of its 2004 takeover of Safeway, the integration of which had pushed it into the red.

Excluding fuel, like-for-like sales - which strip out the impact of new stores - rose 4.6% during the period.

Morrisons added that in the first eight weeks of the second half of the year like-for-like sales were up 5.9%.

In lunchtime trade, shares in the retailer were up 14.5 pence, or 6.2%, at 248p.

'Strong' performance

While turnover in the first six months of the year was flat at �5.85bn, the Morrisons said the performance was "satisfactory" given that 66 stores closed during the period.

Our business is growing again, and we are well on track with our targeted profit improvements Sir Ken Morrison Check Morrisons shares

Customer numbers were also up 5.3% on a like-for-like basis, while converted stores had put in a "particularly strong performance" in bringing in new shoppers, it added.

Chairman Sir Ken Morrison said the turnaround of the company following the integration of Safeway was ahead of schedule with sales at its 373 stores "stronger than anticipated".

"We have more customers now than ever before in our history," he added.

"Our business is growing again, and we are well on track with our targeted profit improvements."

Market battle

However, the latest data from market retail analysts TNS Worldpanel showed Morrisons' market share dropped slightly to 11% in the 12 weeks to September 10, from 11.2% at the same time last year.

According to TNS, Tesco remained the UK's biggest supermarket with a 31.4% market share. Asda is in second place with a 16.7% share and Sainsbury's is third with 15.9%.

Morrisons' �3bn acquisition of former rival Safeway in 2004 created the UK's fourth-largest supermarket.

However, the deal led to a string of problems, prompting Morrisons to issue several profit warnings and pushing it into the red for the first time in its 106-year history.

The difficulties also led to pressure for chairman Sir Ken to step down, which he will now do next year, and relinquish the day-to-day running of the firm, which he has now handed over to new chief executive Marc Bolland.

Turnaround plan

In an effort to turn around the business, Morrisons unveiled a three year Optimisation Plan, which has led to the closure of three depots since December - resulting in 1,800 job losses.

The company said its three-year plan was now on track to save �50m by cutting back on six million labour hours, while a further �30m should be saved by cutting back on duplicate facilities and improving efficiency.

"The group's sales levels are slightly stronger than we had anticipated at the time of preparing the Optimisation Plan, and give us confidence for a stronger second half despite an expectation of a tougher trading environment," Morrisons said.