Daily Mirror (Northern Ireland)
Tesco now a huge grosser
Profits jump but share price plunges
TESCO announced “barnstorming” results yesterday – with half-year profits up nearly 700%.
The supermarket giant made £562million on one measure, up from £71m a year ago when it was hit by big one-off costs.
Tesco’s preferred measure of profits showed that they jumped 27% to £759m.
Either way, it marked another stage in the firm’s turnaround and prompted bosses to pay its first dividend to shareholders in three years.
Payouts were scrapped in the wake of an accounting scandal, with three former executives currently on trial over the affair.
Chief executive Dave Lewis said the dividend – albeit just 1p a share – showed Tesco was “on track for a full recovery”.
Group sales rose 3.3% to £25.2billion – £19bn of that in the UK and Ireland.
Costs have been slashed, more than 800 products launched and it’s making money from property deals. A big change to the value of Tesco’s huge pension scheme helped slash £3.7bn off the firm’s debt mountain – although it still stands at an eye-watering £13bn.
John Ibbotson, of industry experts Retail Vision, said: “This barnstorming result shows how far the turnaround has come.
“The giant has woken from its slumber, and then some.”
Yet Tesco’s share price fell a hefty 3.2% yesterday after initially rising sharply.
Analysts blamed weaker UK growth, debts, competition and concerns about Tesco’s planned £3.7bn takeover of cash and carry giant Booker.
The Competition and Markets Authority is due to announce an initial decision on whether it can go ahead this month and make a final verdict by the end of 2017.
Laith Khalaf, of Hargreaves Lansdown, warned: “The risk is that just as the good ship Tesco is steadying, it gets blown off course by the Booker deal.”
Tesco boss Dave Lewis said he was “shocked” by claims over hygiene at leading chicken supplier 2 Sisters Food. An undercover investigation found instances of slaughter dates being altered. It’s also claimed 2 Sisters took Lidl chicken and repackaged it under Tesco’s Willow Farm brand. Lewis said he was as “shocked as anybody”.