Morrisons has announced “good early progress” on its three-year plan, despite a fall in sales and profits as a price war between the big four supermarkets and discounters such as Aldi and Lidl.

In a statement, Morrisons said that it remained confident of generating £2 billion of cash and £1 billion of cost savings over three years thanks to its turnaround plan, although it was too early to see results in its figures.

In the six months to August 3rd, total turnover was down 5%, with like-for-like sales down 7% and pre-tax profits down by 30%. However, the company said that it was on-track and that it anticipated benefits to start showing through its financial results in the second half.

Sir Ian Gibson, non-executive chairman, commented: "Conditions are tough, and the industry is going through unprecedented change. 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. In line with the policy we set out in March, we are increasing the interim dividend by 5% to 4.03p, and confirm our commitment to pay a total dividend for 2014/15 of not less than 13.65p.

“As previously announced, Andrew Higginson joins the board as non-executive deputy chairman and chairman elect on 1st October. Andy has a tremendous reputation and has had a distinguished executive career at the forefront of UK retailing, and I am sure he will be a huge asset to Morrisons. I am looking forward to working with him to ensure a smooth transition before I retire in 2015."

Dalton Philips, chief executive, said: "We are six months into the three-year plan that we set out in March and, although it is early days, I am encouraged by the progress we have made. There is an enormous amount of change and modernisation flowing through our core business, much of it enabled by new systems. Price investment, in-store improvements, and better products were all key components of the work undertaken in the first half, and the Morrisons card launches soon. Our new growth channels - online and convenience - are progressing well, and our cost-savings and cash flow plans are both on track to achieve our ambitious three-year targets.

Although it is too early to see the benefits of the three-year plan in the sales line, Morrisons is getting back on the front foot, and implementing change and innovation at real pace throughout the business. We are meeting the challenges of structural change with decisive action and are on track to become a more distinctive value retailer for the next generation of grocery retail."