The latest preliminary results from Tesco show positive sales and profit growth as well as strong cash generation. Group sales are up 2.3% to £51.0bn, while UK like-for-like sales are up 2.2% with consistent strength in fresh food (0.4%). Group operating profit before exceptional items is up 28.4% to £1,644m.
The results include £31m full year profits arising on property-related items and show £2m net loss in the second half.
In-year cost savings of £594m have been noted and savings of £820m to date towards a £1.5bn medium-term target.
Innovations including the contactless Clubcard, an own brand re-launch and the new Wicked Kitchen vegan range are said to have performed well.
The completion of the Booker merger has also led to “continued customer satisfaction, top line growth, and strong cash generation”.
The retailer states it is on track to deliver a recurring run-rate of at least £200m pre-tax synergies (c.£60m in first year).
Dave Lewis, Tesco chief executive, said: “This has been another year of strong progress, with the ninth consecutive quarter of growth. More people are choosing to shop at Tesco and our brand is stronger, as customers recognise improvements in both quality and value.
“We have further improved profitability, with group operating margin reaching 3.0% in the second half. We are generating significant levels of cash and net debt is down by almost £6bn over the last three years. All of this puts us firmly on track to deliver our medium-term ambitions and create long-term value for every stakeholder in Tesco.
“I am delighted to have completed our merger with Booker, and we are moving quickly to deliver synergies and access new growth, making the most of the complementary skills in our combined business.”