As Higgins signs off at bank..
Tesco back in growth with surge in profits
Tesco: back in growth
Tesco confirmed its return to growth with underlying operating profits up 28.4% to £1.64 billion last year.
Sales rose 2.3% to £51bn, the ninth consecutive quarter of sales growth for the chain.
The company said it is n track to deliver at least £200m pre-tax synergies from the Booker acquisition, including .£60m in the first year.
The board proposes a final dividend of 2p, giving a full year dividend of 3p and reflecting its confidence in the improved performance.
Hourly paid staff will receive a 10.5% increase over the next two years with the first of three stages completed in November.
Dave Lewis, 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.”
Benny Higgins: retired at the end of February (photo by Terry Murden)
The Edinburgh based bank reported a 4.4% rise in underlying profit before tax to £215.5 million (2017: £206.4m) in Benny Higgins’ final year as chief executive.
Leaving after 10 years in post, Mr Higgins saw headline profit before tax rise 84.1% to £202.7m (2017: £110.1m), partly a result of lower compensation paid out to payment protection insurance claimants.
There was a lower net customer redress charge of £23.8m compared to a charge of £45m in the prior year.
An additional payment protection insurance (PPI) charge of £35m (2017: £45m) was recognised during the year.
During the year, the business has continued to deliver growth across its primary products (credit cards, personal loans, mortgages, personal current accounts, savings and insurance), with active customer numbers increasing by 4.1%.
Mortgage balances grew by 39.2%, reaching £3bn (2017: £2.16bn), while credit card balances increased by 12.7% and personal loans by 8.1%.
Customer deposits of £9.24bn (2017: £8.46bn) continue to be the group’s primary source of funding.
The group’s customer deposits grew by 9.2% in the year, reflecting the value offered to customers and including an increase of 23.2% in personal current account balances.