Energy costs may cringe Sainsbury net

London, May 17 | Updated: May 18 2006, 05:30am hrs
J Sainsbury Plc, the UKs third-largest supermarket chain, said rising energy costs may hurt second-half profit and the company will accelerate price cuts as competition with Tesco Plc and Wal-Mart Stores Incs Asda increased.

The market remains challenging, but Sainsburys will continue to maintain its competitive position on price while building its quality food offer, chief executive officer Justin King said an e-mailed statement on Wednesday.

Net income fell 65% to 64 million pounds ($121 million), or 3.8 pence a share, in the year ended March 25, from 184 million pounds, or 4.1 pence, a year earlier. Pretax profit excluding certain one-time items rose 12% to 267 million pounds, the company said. Bloomberg

Sainsbury may overtake Asda as Britains second-biggest supermarket should its sales growth continue, according to Tim Attenborough, an analyst at Exane BNP Paribas in London who has a neutral recommendation on Sainsbury shares. In March, Sainsbury said sales rose for a fifth straight quarter.

The four biggest supermarket chains in the UK, Tesco, Asda, Sainsbury and William Morrison Supermarkets Plc, were told earlier this month that they face a second inquiry in six years into their dominance of the 120 billion-pound industry.