GREGGS plc expects to create up to 600 jobs this year as it forges ahead with expansion plans.

The group, based in Newcastle, plans to increase the number of shops from about 1,230 to 1,700 by 2010, and predicted it would open 67 outlets this year and close another 37.

The jobs announcement came as the company announced a record 12th annual profits increase in succession.

Increased competition in the sandwich market saw the sector ease from ten per cent growth a year to seven per cent.

The sandwich industry is estimated to be worth £3.5bn, and Greggs remains the largest independent sandwich specialist.

The company was also buoyed by a resurgence in its Bakers Oven division, which has 220 stores.

It had been lagging behind the group's expectations in the past, which had predicted 25 store openings, but which instead saw 55 closures, giving the company 80 fewer stores than had been hoped.

Sir Michael Darrington, managing director, said: "Bakers Oven were not focused effectively enough on having a good sandwich offer and the management in certain areas was not strong enough.

"These things have been progressively sorted out. We are feeling much better about that than we have for a long time."

The company said pre-tax profits rose 10.4 per cent to £40.5m last year.

Like-for-like sales improved progressively after last summer's heatwave, rising 3.3 per cent during the year to December 27 and by 3.1 per cent in the first nine weeks of this year.

Chairman Derek Netherton said the company's trading during the year was satisfactory, and said its market position and brand strengths left it well equipped to counter the challenge.

"We are well placed to deliver another year of progress,'' he said.

Greggs, which employs 18,000 staff nationwide, celebrates the 20th anniversary of its flotation on the stock market this year.

The group has 1,007 outlets trading under the Greggs name as well as the Bakers Oven shops.