City File: Asda

THE RECOVERY of Asda, the supermarkets group, continues apace with year-end figures on Friday likely to show a pre-tax profit of at least pounds 135m and possibly pounds 145m. That is comfortably above the rights issue profits forecast of pounds 130m. The fact to focus on, however, is that it is achieving sales growth this year of around 2.5 per cent, well above expectations.

There is still much to do. Competition is intense and the Asda brand name still needs rebuilding. Costs have to be cut further, and productivity boosted. But there can be little doubt that Asda's problems are steadily being addressed. This is good for the shares, which are worth a buy, though NatWest Securities believes investors should keep a look-out for profit-taking opportunities.

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