10th Apr 2019 07:27
LONDON (Alliance News) - Tesco PLC on Wednesday reported 28% jump in its annual profit, outperforming analysts' expectations, driven by a good sales performance in its core UK & Ireland market.
The UK's biggest supermarket chain by market share also reiterated its confidence in reaching consensus profit expectations in the current financial year, on the back of a "strong performance" to date despite challenges in the market.
For the year ended February 24, Tesco posted pretax profit of GBP1.67 billion, up from GBP1.30 billion a year ago.
Revenue rose 11% year-on-year to GBP63.91 billion from GBP57.49 billion, slightly lagging consensus. Group sales excluding fuels were up 12% to GBP56.88 billion, while on a like-for-like basis sales rose 1.4%.
According to company-compiled analyst consensus, pretax profit was expected to rise 22% to GBP1.58 billion, while revenue was forecast 12% higher year-on-year at GBP64.52 billion.
Like-for-like sales in the UK & Ireland, Tesco's core market, were up 2.9% in the year, driven by an excellent performance of Booker, up 11%.
In Central Europe, like-for-like sales dipped 2.3%, impacted by fewer days of trading following changes to Sunday shop opening in Poland. In Asia like-for-like sales dropped 6.2%.
Analysts were also on the lookout for medium term cash returns however they were "skeptical" out the imminence of cash returns, above the regular dividend.
Tesco proposed a final dividend of 4.10 pence per share, taking the total payout for the year to 5.77p compared with 3.0p a year ago.
Looking ahead, the grocer said it expects to reach a dividend cover level of "around two times earnings" in financial 2020, resulting from the progress made in strengthening the balance sheet and delivering free cash flow.
Chief Executive Officer Dave Lewis said: "After four years we have met or are about to meet the vast majority of our turnaround goals. I'm very confident that we will complete the journey in 2019/20."
In January, Tesco announced several changes to its business structure with the aim of simplifying its organisation, putting 9,000 jobs on the line.
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