Economy

Tesco to pay first dividend since 2014-15 crisis, profit up 27%

Tesco to pay first dividend since 2014-15 crisis, profit up 27%

Tesco boss Dave Lewis has hailed a "significant milestone" in the firm's turnaround after unveiling the first dividend payout for three years following a surge in half-year profits and sales.

Tesco scrapped dividend payments a month later, as chief executive Dave Lewis implemented a turnaround plan for the business following the profits overstatement scandal.

Group revenue rose to GBP28.3 billion, compared with GBP27.34 billion a year earlier, with comparable sales in the United Kingdom and Ireland growing 2.1%.

"We therefore continue to recommend Tesco as a "hold" for medium risk investors".

In addition, Britain's largest supermarket said it would pay a 1p dividend, after announcing a 71.8p percent increase in half year profits to £885 million.

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Tesco has posted a 0.7% increase in group sales (at constant rates) in the first half of its financial year, posting sales of £25.2 billion for the period.

Tesco said revenues grew by 3.7 percent to £28.3 billion over the reporting period, with customers attracted to Tesco stores and its online offerings by the "lowest level of food price inflation. amongst peers" operating in the UK.

The last time Tesco paid dividend was back in the 2014-15, just before three of its former executives were accused of overstating the profits by about £250m.

The company had net debt of 3.3 billion pounds by August 26.

Tesco said the resumption of its dividend after a three year break "reflects improved performance and board confidence".

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Despite facing stiff competition from discount rivals like Lidl and Aldi, Tesco's fresh food performed well in the United Kingdom with sales up by 1.5 per cent.

ETX Capital analyst Neil Wilson said Tesco's drive to keep down prices was giving the company "an edge over the other big players in terms of coping with discounters", such as growing German players in the United Kingdom market, Aldi and Lidl.

Positive sales and profit growth come against a backdrop of "challenging" marketing conditions and "inflationary pressure", the retailer said. "Our offer is more competitive and more customers are shopping at Tesco".

"The Competition and Markets Authority is due to deliver its findings soon, and the recent plight of Palmer & Harvey, one of Tesco's key suppliers, will serve to underline the potential knock-on effects of the deal".

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