Tesco lifts full-year outlook on strong first half
Supermarket giant Tesco Plc lifted its full-year guidance on Thursday, after a strong first half fuelled by the warm summer weather.
Group sales excluding VAT and fuel rose 5.1% in the 26 weeks to 23 August, to £33.05bn, while adjusted operating profits sparked 1.5% to £1.67bn.
On a like-for-like basis, group sales rose 4.3%, including a 4.9% jump in the UK.
Tesco said volume-driven market share gains, a savings programme and the good weather had helped offset higher costs - including higher employer National Insurance contributions and the new packaging levy - in the UK and Ireland.
Ken Murphy, chief executive, said: "I am pleased with our first half performance, which builds on already strong momentum.
"Our market share gains in the UK are a particular highlight and reflect the decisive action we took at the start of the year to further invest in value, quality and service.
"The extension of our savings programme is helping offset new operating cost inflation.
"The steps we have taken to keep prices own for customers have improved our price position relative to the market."
Looking to the second half, the grocer acknowledged that competitive intensity remained "elevated".
But it continued: "However, in the first half, a better-than-expected customer response to our actions and the benefit of an extended period of good weather have helped offset the cost of our investments.
"We now expect full-year group adjusted operating profit between £2.9bn and £3.1bn, an increase from the previous range of between £2.7bn and £3.0bn."
On statutory basis, interim group revenues rose 3.6% to £36.04bn but pre-tax profits were 6.3% lower at £1.31bn, due to separation costs related to the disposal of its banking operations to Barclays a year previously.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.
