Tesco Shares Fall on 1st Half Adjusted Operating Profit Miss -- Update
03 October 2018 - 9:05PM
Dow Jones News
(Recasts lead, adds share-price movement, Asian sales
figures)
By Maryam Cockar and Dimitrios Kontos
Shares in Tesco PLC (TSCO.LN) fell sharply on Wednesday after
the company reported a first-half headline operating profit below
market expectations, although its pretax profit and revenue for the
period rose on year.
The U.K.'s biggest grocer by market share made a group operating
profit before exceptional items and amortization of 933 million
pounds ($1.21 billion) for the 26 weeks ended Aug. 25, missing the
market consensus of GBP992 million.
The company made a pretax profit of GBP564 million pounds
compared with GBP553 million a year earlier. Operating profit for
the first half of fiscal 2019 declined to GBP819 million from
GBP876 million.
Group revenue increased to GBP31.73 billion from GBP28.34
billion against a forecast of GBP31.65 billion based on two
analysts polled by FactSet, driven by a 3.8% rise in like-for-like
sales in the U.K. and Ireland.
However, Tesco reported a 29% decline in profit to GBP100
million in Asia, where its like-for-like sales continued to
decline. Thailand's government issuing welfare cards which cannot
be redeemed in modern retail chains hurt sales in the country and
the company expects the negative effects to continue in the second
half, it said.
Tesco raised the interim dividend to 1.67 pence a share from
1.00 pence a year earlier, when it resumed dividend payments
following a hiatus of more than two years.
The company said it worked alongside 358 of its existing
suppliers to create the new Jack's brand with 1,800 products. The
recently-launched Jack's, which aims at offering products at lower
prices, is Tesco's reply to German low-cost grocers Aldi and Lidl
gaining market share in the U.K.
Shares at 1030 GMT were down 8.2% at 215.90 pence.
Write to Maryam Cockar at maryam.cockar@dowjones.com and
Dimitrios Kontos at dimitrios.kontos@dowjones.com
(END) Dow Jones Newswires
October 03, 2018 06:50 ET (10:50 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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