BAKERY chain Greggs announced a 15 per cent increase in first-half profits yesterday - but warned over rising costs and unfavourable weather.

The Newcastle-based group, which has 1,288 outlets under the Greggs and Bakers' Oven brands, reported pre-tax profits before June 18 had climbed to £15.6m. However, profits in the six weeks to July 30 were down on a year earlier as sales of savouries dipped in hot weather.

Managing director Sir Michael Darrington remained confident about progress in the second half - given more typical British weather - and said the biggest growth was in the North-East and Scotland.

He said Greggs will continue to expand and introduce new product lines, including a range of low-fat foods. The group has recently opened 25 outlets nationwide, and also has four shops in Belgium.

Analysts expect full-year profits of about £50.2m, up from £47.8m a year earlier.