Monday 23 April 2018

Tesco to report rising profit in first set of results since Booker deal

The supermarket giant is forecast to post a 22% rise in operating profit to £1.56 billion.

Tesco food waste pledge
Tesco food waste pledge

By Ravender Sembhy, Press Association City Editor

Tesco will report to the market next week for the first time since completing its £3.7 billion takeover of wholesaler Booker, with analysts expecting a healthy rise in full year profits.

The supermarket giant is forecast to post a 22% rise in operating profit to £1.56 billion for the year to February, according to a consensus of City analysts.

Barclays predicts like-for-like sales, a key industry benchmark, rose 2.1% in the fourth quarter, which would result in a second consecutive year of growth.

It will represent yet another step on the road to the supermarket’s recovery under chief executive Dave Lewis, who has been embarking on a turnaround since taking the hot seat in 2014.

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FTSE 100 photos

Underlining the recovery, experts also expect Tesco to announce its first end of year dividend since 2014.

Nicholas Hyatt, equity analyst at Hargreaves Lansdown, said: “We expect to see profitability rise, while Dave Lewis will confirm the first end of year dividend since 2014.”

Tesco’s figures will also be buoyed by a record Christmas performance, which included its biggest ever sales week with 58 million customer transactions and 770,000 online grocery deliveries.

Next week’s results come after Tesco completed its deal to buy Booker last month, which saw the creation of the UK’s largest food business.

Tesco has more than 3,000 stores across the UK, while Londis and Budgens owner Booker is the country’s largest wholesaler.

It supplies more than 5,000 stores under the Premier, Londis, Budgens and Family Shopper brands, as well as thousands of independent retailers and caterers.

The deal, which was regarded as a victory for Mr Lewis, will see the highly-regarded Booker boss Charles Wilson head up Tesco’s UK business.

We expect to see profitability rise, while Dave Lewis will confirm the first end of year dividend since 2014. Nicholas Hyatt, equity analyst at Hargreaves Lansdown

But investors will also be looking for more detail regarding the tie up, in particular cost savings.

“Comments around the integration, including on the £200 million of revenue and cost synergies that were targeted at the time of the original announcement, will be closely scrutinised,” Mr Hyatt added.

Mr Lewis will also be probed on his views concerning consumer confidence and spending power in the face of Brexit-fuelled inflation.

Supermarkets are battling rising costs linked to the Brexit-hit pound, falling shopper confidence and fierce competition in the sector as Lidl and Aldi continue their relentless march.

Press Association

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