Tesco reveals bumper first half profits

Tesco reveals bumper first half profits

	Published : Tue, 03 Oct 2006 09:55 By : Amy Watts Print this Story

LONDON - UK's biggest supermarket group Tesco today revealed first-half profits of more than £1 billion and comfortable beat the forecasts by City experts. Analysts had predicted that Tesco would post underlying profits of £1.13 billion in the six months ending August 31, but the supermarket delivered profits of £1.152 billion during the period.

The sales in its core segments rose by 10.2 percent, but the most impressive figures were in the non-food sales, which jumped 12.6 percent during the six months. Britain's number-one retailer also reported robust sales in the international markets with sales improving by 21 percent.

Tesco's total sales in the six-month period were £22.7 billion, an increase of 12.7 percent over that reported at the same time last year. "Tesco is continuing to deliver strong progress across the group - with all four parts of our strategy contributing - as more customers vote with their feet and shop with us," said Sir Terry Leahy, Tesco's chief executive. Tesco's record showing comes despite the Competition Commission's inquiry into the supposed stranglehold in the grocery market by supermarkets.

Sir Terry said that Tesco's planned move into the US market has so far cost £20 million in start-up charges. The supermarket is looking to enter the US market in a cautious manner unlike so many other British retailers who have met with failure. Tesco has plans to invest £500 million over the next 24 months n this venture.

Sir Terry said that the full year costs would be £50 million after the launch of Tesco Direct, the catalogue shopping service. "At the same time, with the recent launch of Tesco Direct and the preparations for our entry into the United States in 2007, we are investing into new markets to drive the long term growth of the business, as well as making a good start on our new community plan," Sir Terry added.

Tesco shares closed at 365 pence last night. The supermarket group has also proposed an interim dividend of 2.81 pence per share as compared to last year’s 2.53 pence per share.