Tesco countered “modest” UK sales growth to return a 12.5 per cent increase in half-year profits with Asian sales proving key.
The supermarket reported a rise to £1.6 billion in profit in the 26 weeks to August 28 with higher fuel costs meaning the bulk of its gains were made at the pump as low food inflation slowed sales.
In a statement, the company said UK like-for-like sales excluding petrol rose 1.3 per cent in the second quarter, compared with 1.1 per cent in the first quarter - but, adjusting for VAT sales, the figure was just 0.3 per cent higher over the half-year.
UK like-for-like sales have been modest because "the economy is pretty stagnant" although there were "signs of a recovery", according to finance director Lawrie McIlwee.
McIlwee added higher food inflation last year made for tough comparatives, while higher fuel costs meant customers had less to spend in stores.
Chief executive Terry Leahy said: “The global economic headwinds of the last two years are being replaced by the tailwinds of recovery in most of our markets and this is helping our International businesses to resume strong sales and profit momentum. Our important Asian markets in particular are emerging strongly from recession and we are now benefiting from the substantial investment we continued to commit to the region during the downturn.
Leahy added: “In the UK, we have coped very well with subdued demand and modest levels of industry like-for-like growth, helped by excellent productivity, a pleasing performance from new stores and good growth from our Services businesses, particularly online and Tesco Bank. Economic recovery in the UK is slow and steady and I believe our investment in making the shopping trip even better for customers means that Tesco is well-placed to grow in this environment.”
Tesco plans to create 9,000 jobs in the UK this year.
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