Tesco's Fiscal Year 2018 Pretax Profit Beats Expectations -- Earnings Review

   By Maryam Cockar 
 

Tesco PLC (TSCO.LN) posted earnings for fiscal 2018 on Wednesday. Here's how the results came in:

PRETAX PROFIT: The U.K.'s largest grocer by market share made a pretax profit of 1.30 billion pounds ($1.85 billion) in the financial year ended Feb. 24, beating expectations of GBP1.03 billion, according to FactSet, based on seven analysts' estimates. Tesco reported a pretax profit of GBP145 million the year earlier.

REVENUE: The grocer generated revenue of GBP57.50 billion, up from GBP55.92 billion a year earlier. This was slightly below the GBP57.66 billion expected, according to FactSet.

WHAT WE WATCHED:

DIVIDEND: As widely expected, Tesco declared its first end-of-year dividend since fiscal 2014 of 2 pence a share, bringing the total payout for the year to 3 pence. The company reiterated its dividend policy to pay around half its earnings to shareholders in the medium term. Tesco had canceled payments amid an accounting scandal in 2014.

BOOKER GROUP: Wednesday's results were the first since Tesco's GBP3.70 billion takeover of U.K. wholesaler Booker Group PLC. Tesco reiterated its target of GBP200 million acquisition synergies a year by the third year of ownership. It expects to have a synergy gain of around GBP60.0 million in the first year and for this to grow to around GBP140.0 million in the second year.

OUTLOOK: Tesco didn't comment on the outlook for U.K. consumers, but Laith Khalaf, senior analyst at Hargreaves Lansdown, said Tesco has done well to increase margins significantly despite the weaker pound and inflation as it implements its turnaround strategy. He said the company's target of boosting margins to between 3.5% and 4% by fiscal 2020 is now within reach.

Write to Maryam Cockar at [e-mail]

(END) Dow Jones Newswires

April 11, 2018 05:38 ET (09:38 GMT)

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