Tesco Shares Fall on 1st Half Adjusted Operating Profit Miss -- Update

(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 [e-mail] and Dimitrios Kontos at [e-mail]

(END) Dow Jones Newswires

October 03, 2018 06:50 ET (10:50 GMT)

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