By Jaime Llinares Taboada

 

Tesco PLC on Wednesday raised guidance for the fiscal year after a strong first half, and said that it is starting a share-buyback program.

The company said that its sales and profit increased ahead of expectations in the first half ended Aug. 28, outperforming the market, and upgraded its adjusted retail operating profit guidance to 2.5 billion pounds-2.6 billion pounds ($3.41 billion-$3.54 billion) for the year ending in February 2022. The Tesco Bank business is expected to deliver an adjusted operating profit of at least GBP120 million.

Tesco, the U.K.'s biggest grocer by market share, made a pretax profit of GBP1.14 billion in the first half of the fiscal year, more than doubling from GBP551 million a year earlier.

Revenue grew 5.9% to GBP30.4 billion, and operating profit rose 30% to GBP1.30 billion.

The company's board declared an interim dividend of 3.20 pence a share, in line with a year earlier.

In addition, Tesco announced the start of a share buyback program, with a first tranche of GBP500 million to be repurchased by October 2022.

"Our strong performance to date and our confidence in our ability to generate cash in the coming years has enabled us to announce the start of a buyback programme that will balance the maintenance of a strong capital structure with returning surplus cash," Chief Executive Ken Murphy said.

Looking forward, the group said that it will aim to generate GBP1.4 billion-GBP1.8 billion of retail free cash flow annually and grow the dividend each year, targeting a pay-out of around 50% of earnings. Capital expenditure will remain between GBP0.9 billion and GBP1.2 billion.

 

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

 

(END) Dow Jones Newswires

October 06, 2021 03:01 ET (07:01 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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