Tesco resumes dividends as pretax profit jumps

Tesco supermarket shopping bags are

Tesco has reported a surge in its half-year profits as it continues to see rising sales, and will resume dividend payments to investors.

The retailer's United Kingdom like-for-like sales in the second quarter also experienced a 2.1 per cent uptick, although this was a slight slowdown on the 2.3 per cent recorded in the previous three months.

"[This] reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders", said Mr Lewis.

The supermarket group will pay a dividend of 1p per share and expected to pay a larger final dividend of about 2p per share.

Tesco's operating profit rose 27.3 per cent to £759m while its net debt fell from £4,352m to £3,260m.

Statutory revenue was up 3.7 per cent to £28.3bn while profit before tax rose from £491m to £562m.

The last time Tesco paid dividend was back in the 2014-15, just before three of its former executives were accused of overstating the profits by about £250m.




It remains 'firmly on track to reduce our costs by £1.5 billion, generate £9 billion of retail cash from operations and improve operating margins to between 3.5% and 4.0% by 2019/20'.

Helal Miah investment research analyst at The Share Centre, said: "Overall these are great results and the shares have opened up this morning close to 2% while peers Sainsbury's and Morrisons have fallen by roughly 1%".

The figures also point to Tesco's success in navigating the current inflationary trading environment as well as fragile consumer confidence in the aftermath of last year's Brexit vote.

The group said its inflation was around 1% lower than across the rest of the supermarket sector as it worked with suppliers to protect customers from inflationary pressures.

While the numbers and story behind Tesco at the moment looks encouraging, our view is that competition is here to stay and will be ramped up by the German discounters making the margin improvement targets more hard to achieve over time.

"The Competition and Markets Authority is due to deliver its findings soon, and the recent plight of Palmer & Harvey, one of Tesco's key suppliers, will serve to underline the potential knock-on effects of the deal".

Tesco said sales growth in United Kingdom was driven by strong demand for its fresh food brands, which featured in over 70% of customer baskets.

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