Tesco Full-Year Preliminaries 'Ahead of Expectations'

Tesco has reported its preliminary results for the 2018/19 financial year. 

Headlines

• Group sales2 £56.9bn, +11.5%
  • UK & ROI LFL sales8 +2.9% incl. Tesco UK +1.7% and Booker +11.1%
  • Central Europe LFL sales8 (2.3)%: fewer trading days and less general merchandise
  • Asia LFL sales8 (6.2)%: improvement to (3.0)% in 4Q
• Group operating profit4 £2,206m, +34.0
  • UK & ROI £1,537m, +45.1%; incl. £196m Booker (last year: £185m9) and £79m synergies
  • Central Europe £186m, +56.3%: significant cost reductions and improved profit mix
  • Asia £286m, (4.3)%: supplier negotiations concluded and significant restructuring complete
  • Bank £197m, +16.6%: strong banking performance and one-off contract renewal benefit10
• Group operating margin4 3.45%; 2H operating margin4 3.96% (3.79% excl. Booker)
• Retail operating cash flow6 £2.5bn: c.£(490)m working capital timing impact year-on-year
• Retail free cashflow of £906m: impacted y-o-y by working capital timing, higher tax and market purchases of shares
• Net debt6,7 £(2.9)bn: increased by £(238)m after £(766)m Booker cash consideration
• Final dividend 4.10p, giving FY dividend of 5.77p – now expect to reach c.2.0x EPS cover11 in 2019/20
• Statutory revenue +11.2% to £63.9bn; operating profit +17.1% to £2,153m; profit before tax +28.8% to £1,674m

Dave Lewis, Chief Executive:

After four years we have met or are about to meet the vast majority of our turnaround goals. I’m very confident that we will complete the journey in 2019/20.

I’m delighted with the broad-based improvement across the business. We have restored our competitiveness for customers - including through the introduction of ‘Exclusively at Tesco’ - and rebuilt a sustainable base of profitability. The full year margin of 3.45% represents clear progress and the second half level of 3.79%, even before the benefit of Booker, puts us comfortably in the aspirational range we set four years ago.

I’m pleased that we are able to accelerate the recovery in the dividend as a result of our continued capital discipline and strong improvement in cash profitability.”

Source : Insight DIY and Tesco

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