Tesco (TSCO) H1 24/25 earnings summary

Executive summary

• Delivered strong volume-led sales growth and market share gains in the UK and ROI, supported by improved customer satisfaction and brand perception.

• Achieved robust financial performance with group sales up 4.0% to £31,463m and adjusted operating profit up 15.8% at constant rates, driven by retail performance and efficiency savings.

• Maintained position as the UK's cheapest full-line grocer since November 2022, with sector-leading margins and rising Net Promoter Score.

• Interim dividend set at 4.25p per share, up 10.4% year-over-year; share buyback programme ongoing with £575m repurchased in H1 and £1bn target by April 2025.

• Continued investment in value, quality, digital capabilities, and colleague wellbeing, including the largest ever pay increase and enhanced offerings.

Financial highlights

• Group sales (excl. VAT and fuel) up 4.0% to £31,463m; retail adjusted operating profit up 10.0% to £1,555m; statutory operating profit up 13.0% to £1,612m.

• Adjusted diluted EPS increased 23.7% to 14.45p; statutory diluted EPS up 19.3% to 14.62p.

• Retail free cash flow of £1,261m, ahead of expectations but down from last year due to lower working capital benefit and higher tax paid.

• Net debt reduced by £88m since February 2024 to £9,676m; net debt/EBITDA at 2.1x.

• Tesco Bank delivered £94m profit, including £42m non-recurring benefits; revenue from retained insurance and money services grew 46.6%.

Outlook and guidance

• Retail adjusted operating profit guidance raised to around £2.9bn for FY 2024/25; Tesco Bank profit expected at £120m.

• Retail free cash flow expected within £1.4bn–£1.8bn; capex expected at £1.4bn.

• On track to complete £1bn share buyback by April 2025; effective tax rate expected around 27%.

• Leverage ratio targeted at 2.8–2.3x net debt/EBITDA.

• Management remains focused on competitiveness, value, and flexibility to invest for future growth.