Tesco turnaround continues as half-year profits jump

Tescos  recovery is ongoing but recent events continue to challenge the firm
Tescos recovery is ongoing but recent events continue to challenge the firm

Supermarket giant Tesco has reported a surge in half-year profits and rising sales as it hailed efforts to keep prices low amid Brexit-fuelled inflation.

The group said UK and Ireland underlying operating profits leapt 21.1% higher to £471 million in its first half after it notched up its seventh quarter in a row of rising sales.

UK like-for-like sales in the second quarter lifted 2.1%, although this was down slightly on the 2.3% recorded in the previous three months.

Chief executive Dave Lewis said the group was now “more competitive and more customers are shopping at Tesco” as it sought to keep prices low.

He added: “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.”

Sales rose from £27.3 billion to £28.3bn, while on a statutory basis, pre-tax profits rose from £71m to £562m and Mr Lewis confirmed that Tesco would resume paying a dividend after nearly three years, with a 1p a share interim payout.

“Today’s announcement that we are resuming our dividend 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,” the CEO said.

But the group has come under heavy fire in recent days over its own-brand chicken after it was discovered that its supplier 2 Sisters had taken Lidl chicken and repackaged it under Tesco’s Willow Farm brand.

Mr Lewis said the group was as “shocked as anybody” by the undercover media investigation, but said it would keep the brand, which he insisted had a quality specification unique to Tesco.