Increase in Irish sales helps Tesco profits pass £1.6bn
Tesco reported its ninth consecutive quarter of like-for-like sales growth in the three months to February 24 as sales at the grocery giant topped £51bn (€58bn) worldwide for the year.
Group operating profit before exceptional items increased a massive 28.4pc to £1.6bn (€1.8bn) for the year to end February 24. The figure includes £31m in full year profits arising on property items, according to the group’s preliminary results for the year.
In the Republic of Ireland like-for-like sales grew by 2.7pc during the year.
The main driver of growth in Ireland was a 4.2pc increase in sales volume, well ahead of market volume growth.
Tesco sales of fresh food were particularly strong in Ireland, growing by 5.2pc year-on-year.
The UK and Ireland division reported operating profit before exceptional items of £1bn, a 31.1pc increase on the previous year, with margin growth of 50 basis points year-on-year.
"Our efforts to reduce operating costs and improve efficiencies across our store estate and head office have delivered a significant increase in profitability, particularly during the second half when our operating margin reached 2.5pc, up 67 basis points year-on-year," Tesco said.
"Further progress on maximising the mix within our business and driving volume more selectively, particularly in general merchandise, has aided margin expansion".
During the year the company reduced its net debt by £1.1bn to £2.6bn.
Announcing the results, Tesco said that it would pay a final dividend of 2.0p to shareholders, resulting in a 3.0p dividend to shareholders for the financial year, which the group said reflected the “improved performance and board confidence”.
During the year the group completed its merger with wholesaler Booker for £3.7bn.
"We have further improved profitability, with group operating margin reaching 3pc in the second half," Dave Lewis, chief executive of Tesco, said.
"We are generating significant levels of cash and net debt is down by almost £6bn over the last three years. All of this puts us firmly on track to deliver our medium-term ambitions and create long-term value for every stakeholder in Tesco".
Commenting on the Booker merger, Mr Lewis said that the companies are "moving quickly to deliver synergies and access new growth, making the most of the complementary skills in our combined business".