Tesco (TSCO) H2 24/25 earnings summary

Executive summary

• Achieved strong financial and operational performance, with record market share and customer satisfaction in the UK and Ireland, and continued progress on strategic priorities focused on value, quality, and service.

• Maintained momentum in a challenging environment, with increased investments in price, quality, and digital capabilities, and a disciplined approach to capital allocation.

• Delivered robust free cash flow and returned significant capital to shareholders through dividends and buybacks.

Financial highlights

• Group sales grew 4% year-over-year at constant exchange rates, with like-for-like sales up 3.1%.

• Adjusted operating profit increased by 10.9% to £3.1 billion, and free cash flow reached £1.75 billion, at the upper end of guidance.

• Net debt reduced to £9.45 billion, with a net debt to EBITDA ratio of 2.0x, down from 2.2x.

• Headline EPS rose 17% to 27.38p; final dividend of 13.70p per share approved, maintaining a ~50% payout ratio.

• Returned £1.9 billion to shareholders via dividends and buybacks.

Outlook and guidance

• Provided a wider than usual profit guidance range for the coming year, reflecting increased investment in value and quality, and anticipating a lower profit year-on-year.

• Guidance allows flexibility to respond to competitive pressures and maintain market share.

• Targeting free cash flow of £1.4–1.8 billion for the year ahead.