Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Tesco share price up after earnings rise 30% as turnaround plan pays dividends

The UK’s largest supermarket saw its profits rise by more than 30%, helping it hike its dividend after the success of its four-year turnaround plan.

Tesco announced a final dividend of 4.10p on Wednesday, bringing its full-year pay-out to 5.77p, representing a 93% increase compared to its previous year, as the supermarket’s four-year turnaround plan sees it raise margins and increase profits.

‘After four years we have met or are about to meet the vast majority of our turnaround goals,’ Tesco CEO Dave Lewis said. ‘I’m very confident that we will complete the journey in 2019/20.’

‘I’m pleased that we are able to accelerate the recovery in the dividend as a result of our continued capital discipline and strong improvement in cash profitability,’ he added.

Tesco results: key figures

Tesco had targeted £1.5 billion in cost savings and a margin of between 3.5% - 4% by the 2019/20 financial year, with the company on track to achieve those goals after recording a strong set of results on Wednesday.

Three years in to its four-year turnaround plan and the British supermarket has seen its margins rise to 3.45% overall and 3.79% in the second half of the year, not including the benefits of its £4 billion acquisition of UK-based wholesaler Booker.

Tesco has also realised cost savings of £532 million in the 2018/19 financial year, bringing its total savings to date to £1.4 billion.

‘I’m delighted with the broad-based improvement across the business,’ Lewis said. ‘We have restored our competitiveness for customers - including through the introduction of ‘Exclusively at Tesco’ - and rebuilt a sustainable base of profitability.’

‘The full year margin of 3.45% represents clear progress and the second half level of 3.79%, even before the benefit of Booker, puts us comfortably in the aspirational range we set four years ago,’ he added.

Tesco looks forward to bright future

Despite market conditions remaining challenging for Tesco, its strong performance to date leaves the supermarket well-positioned to invest in its future and maintain its position as the UK’s largest grocer.

With one more year left of its four-year turnaround programme, the company continues to focus on improving customer satisfaction, cash profitability and earnings growth, with the business hoping to return that value creation back to shareholders.

As such, Tesco is looking to reach a dividend cover level of around 2x earnings in the 2019/20 financial year and aims to maintain the strength of its balance sheet, with the supermarket targeting a leverage range of 3x – 2.5x total indebtedness to EBITDAR.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See your opportunity?

Seize it now. Trade over 17,000 markets on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.