Tesco raises profit outlook after growth in H1 FY25/26

Core Insights - Tesco has raised its profit guidance for fiscal year 2025/2026 following an increase in sales across all markets in the first half [1][5] - The group adjusted operating profit for H1 25/26 was £1.67 billion ($2.24 billion), reflecting a 1.6% increase at constant rates compared to the previous year [1] - Adjusted diluted earnings per share rose to 15.43 pence, up from 14.45 pence year-on-year [1] Sales Performance - Sales, excluding VAT and fuel, increased by 5.1% at constant rates to £33.05 billion, with like-for-like (LFL) sales growing by 4.3% [2] - In the UK and the Republic of Ireland, LFL sales increased by 4.9%, attributed to targeted price investments and favorable weather [2] - The Booker segment saw LFL sales rise by 1.7% year-on-year [2] Segment Analysis - The adjusted operating profit for the Booker segment rose by 0.6%, supported by favorable weather and savings from the Save to Invest program [3] - Central Europe experienced LFL sales growth of 3.4%, although adjusted operating profit dipped by £5 million year-on-year to £44 million [3][4] Financial Position - Tesco's net debt increased to £9.88 billion at the end of H1 25/26, compared to £9.52 billion in the same period the previous year [4] - The CEO highlighted market share gains in the UK as a significant achievement, resulting from strategic investments in value, quality, and service [4] Future Outlook - Tesco forecasts adjusted operating profit for 2025/26 to be between £2.9 billion and £3.1 billion, an increase from the earlier projection of £2.7 billion to £3.0 billion [5] - Free cash flow guidance remains unchanged at between £1.4 billion and £1.8 billion [5]