Retail

Tesco ups dividend as turnround programme set to complete

Grocer on track to achieve margin targets during coming year

 

Tesco has accelerated plans to increase its dividend as it draws near to achieving the goals of a four-year turnaround programme in the coming financial year.

The UK’s biggest grocer on Wednesday announced a final dividend of 4.10p, bringing its full year dividend to 5.77p, 93 per cent above the previous year, as rising margins and further cost cuts put it on track to complete an overhaul of the company in the coming year.

Tesco had targeted £1.5bn in cost savings and a margin of 3.5-4 per cent by the 2019-2020 financial year.

On Wednesday it said margins for the last financial year had risen to 3.45 per cent overall and 3.96 per cent in the second half, not including the benefits of the £4bn acquisition of wholesaler Booker. Cost savings of £532m brought total savings to date £1.4bn.

“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,” said Mr Lewis.

“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.”

“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.”

During the 2018-19 financial year, revenue rose 11 per cent to £63.9bn, while pre-tax profit was up 28 per cent to £1.67bn. Like for like sales in its core UK market grew 1.7 per cent, following strong Christmas trading.

Despite an “uncertain” market it said it expected to achieve margin targets and dividends of around two times earnings in the coming financial year.