By Jonathan Davies

Morrisons has reported a 30% fall in half-year profits as it continues to struggle to cope with the price war between UK supermarkets.

Morrisons said profits were £239m in the six months to 3 August, down 30% from £344m in the same period last year.

It has struggled more than other members of the "Big Four" supermarkets (Asda, Tesco, Sainsbury's and Morrisons), as they come under increasing pressure from budget supermarkets Aldi and Lidl, and the more premium Waitrose.

Morrisons also said like-for-like sales, which outstrip the effects of new stores and fuel, fell by 7.4% compared with a 1.6% fall last year.

Sir Ian Gibson, non-executive chairman at Morrisons, said: "Our first-half results reflect the reset of the business we announced in March. Morrisons is now well underway with building the foundations for a better future. The board is confident of the new strategy and Morrisons financial position remains strong."

Earlier this year, Morrisons started a £1bn investment programme, including cutting prices of more than 1000 products and opening 200 new stores.

Julie Palmer, Partner at Begbies Traynor, said: “Whereas the likes of Tesco have decided to slash dividends to provide more ammunition in the fight against discounters such as Aldi and Lidl, Morrisons is playing a more risky game of increasing the dividend to shore up shareholder support and selling the family silver instead: its property portfolio. This time round, Morrisons’ gamble has failed to pay off. Both LFL sales and underlying pre-tax profit have decreased dramatically as Morrisons has struggled to compete with spiralling prices and to find its feet amongst the five ‘value’ retailers, with its products still deemed too expensive against the likes of Asda. Whilst Morrisons is cash generative, it is clear it should re-invest that cash in strengthening its online and convenience store offering and its price competitiveness rather than placate shareholders before it’s knocked out of the race altogether.”

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