Tesco share price rises as it resumes dividend as profits rise to £562m in first half

Tesco has resumed its dividend for the first time in three years today, after reporting a 667 per cent increase in pre-tax profit in the first six months of the year.

Read more: This is how City analysts are reacting to Tesco’s did announcement

The figures

Profit before tax rose to £562m from £71m this time last year. Operating profit was up 67.4 per cent from £515m to £885m.

Group sales were up 3.3 per cent to £25.2bn, while UK like-for-likes were in line with expectations, rising 2.2 per cent over the first half.

Revenue rose 3.7 per cent, from £27.3bn to £28.3bn.

Earnings per share grew to 5.21p from 0.42p.

The supermarket has proposed an interim dividend of 1p per share.

Shares in the group were up two per cent at the open.

Why it’s interesting

Tesco said the resumption of its dividend after a three year break “reflects improved performance and board confidence”.

The company’s increased optimism comes as it inches closer to clinching its deal with wholesaler Booker, in a £3.7bn acquisition first unveiled in January this year.

It also coincides with the trial of three former Tesco execs who have been charged with fraud and false accounting.

What Tesco said

“We are continuing to make strong progress. Sales are up, profits are up, cash generation continues to strengthen and net debt levels are less than half what they were when we started our turnaround three years ago,” said Tesco chief exec Dave Lewis.

“All of this is possible because of the focus we have placed on serving shoppers a little better every day. Our offer is more competitive and more customers are shopping at Tesco.

“Today’s announcement that we are resuming our dividend reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders.”