March 7, 2019 / 7:45 AM / 4 months ago

UPDATE 2-Britain's Greggs starts year on a roll with special payout promise

* 2018 underlying pretax profit up 10 pct

* Strong 2019 start boosted by vegan sausage roll interest

* Plans special dividend with first-half results

* Shares up 41 percent so far this year (Adds detail, analyst comment, shares)

By James Davey

LONDON, March 7 (Reuters) - British baker and takeaway food group Greggs said on Thursday it expected to pay a special dividend in July after a “very strong” start to 2019 as it reported a 10 percent rise in 2018 profit.

Greggs, which has 1,950 outlets in shopping streets, railway stations and motorway services, raised its profit outlook for 2019 last month thanks to interest in the launch of a vegan sausage roll, lifting its shares to a record high.

“We don’t know how many of the vegan rolls the baker is actually selling, but the publicity is getting customers through the door one way or the other,” Hargreaves Lansdown analyst Laith Khalaf said following the results.

Shares in Greggs have risen 41 percent so far this year but was down 0.9 percent at 1,783.5 pence at 0835 GMT, valuing the business at 1.65 billion pounds ($2.17 billion).

Greggs said like-for-like sales at company-managed shops increased 9.6 percent in the seven weeks to Feb. 16, bucking the trend of a generally subdued British retail sector.

The company’s chief executive Roger Whiteside noted “significant uncertainties in the months ahead” - a reference to uncertainty over Britain’s departure from the European Union.

But he said: “We hope to continue benefiting from this strong momentum during the first half of 2019 before facing stronger comparatives later in the year.

Greggs made an underlying pretax profit of 89.8 million pounds ($118 million) for the year to Dec. 29 - in line with company guidance of “at least” 88 million pounds and up from 81.8 million pounds made in 2017.

Total sales rose 7.2 percent to 1.03 billion pounds - breaking 1 billion pounds for the first time as Greggs benefited from growth in categories such as healthier options, hot drinks, breakfast and hot food.

The firm increased its total dividend by 10.5 percent to 35.7 pence a share. ($1 = 0.7597 pounds) (Reporting by James Davey, Editing by Paul Sandle and Alexander Smith)

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