Tesco makes 'strong progress' as turnaround continues
Tesco has said its turnaround is firmly on track after sales rose for the seventh consecutive quarter and group revenue increased by 3.7% to £28.3 billion in the first half of its financial year.
In the six months to 26 August, pre-tax profit jumped from £71 million to £562 million as UK like-for-like sales increased by 2.2% after rising by 2.1% in the second quarter. Meanwhile, like-for-like sales in central Europe edged up 0.1% in the six month period although there was a decline of 8.3% in Asia.
The supermarket said the fresh food category had performed particularly well in the UK with volume growth of 1.5% driven by strong ongoing improvements in its offer.
The results mean that Tesco will pay its first dividend in three years.
Dave Lewis, Tesco chief executive, said: "We are continuing to make strong progress. Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago. All of this is possible because of the focus we have placed on serving shoppers a little better every day. Our offer is more competitive and more customers are shopping at Tesco.”
The company said it remains on track to reduce its costs by £1.5 billion, generate £9 billion of retail cash from operations and improve operating margins to between 3.5% and 4% by 2019/20. Capital expenditure in the current year is now expected to be £1.1 billion and going forward, Tesco expects capital expenditure to remain between £1.1 billion and £1.4 billion per year.
Reporting on its proposed merger with Booker, Tesco said it is currently undergoing an in-depth 'Phase 2' investigation by the Competition and Markets Authority. Provisional findings are expected to be made public by the CMA by the end of this month, ahead of a final report by the end of this year.
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