Tesco (TSCO) H2 24/25 earnings summary

Executive summary

• Sales volumes grew, with further UK and Ireland market-share gains; adjusted operating profit rose 10.9% at constant rates and free cash flow was £1.75bn.

• Customer satisfaction, value initiatives and Save to Invest delivery supported performance; positive momentum continued into the new year amid higher competitor activity.

Financial highlights

• Sales were £63.636bn, up 4.0% at constant exchange rates and excluding VAT and fuel; like-for-like sales rose 3.1%.

• Adjusted operating profit was £3.128bn, up 10.9% at constant rates; statutory operating profit was £2.711bn after £417m of adjusting items.

• Statutory profit after tax was £1.604bn, down £160m YoY; adjusted diluted EPS was 27.38p, up 17.0%.

• Free cash flow was £1.750bn, down £313m YoY; the prior-year working-capital inflow and higher tax and capex weighed on the comparison.

• Dividend was 13.70p, up 13.2% YoY; £1.9bn was returned through share buybacks and dividends, including £1bn of share buybacks during the year.

Outlook and guidance

• FY25/26 adjusted operating profit guidance is £2.7bn–£3.0bn on a 52-week comparable basis; the financial year has 53 weeks.

• Free cash flow guidance is £1.4bn–£1.8bn; capex is expected at a similar level to FY24/25’s £1.46bn.

• Adjusted net finance costs are expected broadly in line with FY24/25’s £536m; net debt/EBITDA target is 2.8x–2.3x.

• A £1.45bn share buyback, including £700m of Bank disposal proceeds, is to be completed by April 2026.