British retailer Tesco said earnings in the first half of the year rose 9.1 per cent as sales improved at its international division.
Trading profit, a measure which excludes property gains, climbed to £1.69 billion in the six months ended August 28th, from £1.55 billion a year earlier, the company said today.
That beat the £1.61 billion median estimate of seven analysts surveyed by Bloomberg News.
Sales in Ireland continued a turnaround, Tesco said, driven by changes implemented by the firm last year to cope with the economic downturn.
“We have resumed growth and increased market share. Customers are responding positively to our improved pricing and range and significant uplifts in volumes have now more than offset the impact of sharply lower prices, resulting in positive like-for-like sales growth and a solid profit performance,” Tesco said in a statement.
However, growth moderated during the second quarter, it said.
Sales at Tesco's international stores open at least a year rose 4.1 per cent in the second quarter, after being unchanged in the first quarter.
“The global economic headwinds of the last two years are being replaced by the tailwinds of recovery in most of our markets and this is helping our international businesses to resume strong sales and profit momentum,” said chief executive Terry Leahy.
“Our important Asian markets in particular are emerging strongly from recession and we are now benefiting from the substantial investment we continued to commit to the region during the downturn.”
To compensate for slowing growth in its domestic market, the UK retailer is spending £2 billion developing shopping malls in China and plans to extend its hypermarkets and franchise convenience outlets in South Korea.
"The UK market has remained rational and international sales should be picking up," Alistair Johnston, an analyst at Citigroup, said in a report before the statement was released. He has a "sell" rating on the stock.
Net income climbed 15 per cent to £1.18 billion, while sales increased 8.3 per cent to £32.9 billion, including value-added tax.
The retailer is about to embark on a management reshuffle with Philip Clarke, director of international operations, taking over from Mr Leahy in March, while US chief executive officer Tim Mason moves to deputy chief executive.
Additional reporting: Bloomberg
