# Tesco Plc Reports 30% Jump in Adjusted Operating Profit

- Link: https://www.directorstalkinterviews.com/tesco-plc-reports-30-jump-adjusted-operating-profit/412727116
- Published: 2017-04-12T07:53:47+01:00
- Author: Giles Arbor

**[Tesco Plc](https://www.directorstalkinterviews.com/ftse-company/tesco-plc/tsco.l)**(
LON:TSCO) announced to today its preliminary results for 2016/17 in which it said
that its strong performance drove sales growth and profit recovery continues.

> **Dave Lewis, Tesco Plc Chief Executive said:** “Today, our prices are lower, 
> our range is simpler and our service and availability have never been better. 
> Our exclusive fresh food brands have strengthened our value proposition and our
> food quality perception is at its highest level for five years. At the same time,
> we have increased profits, generated more cash and significantly reduced debt.
> We are ahead of where we expected to be at this stage, having made good progress
> on all six of the strategic drivers we shared in October. We are confident that
> we can build on this strong performance in the year ahead, making further progress
> towards our medium-term ambitions.
>  On top of this, our proposed merger with Booker
> will bring together two complementary businesses, driving additional value for
> shareholders by realising substantial synergies and enabling us to access the 
> faster growing ‘out of home’ food market.”

**Growth in sales, volume, profit and cash**
 · Group sales up 4.3% to £49.9bn.

· UK like-for-like sales up 0.9% – first reported full-year growth since 2009/10;
UK food LFL up 1.3%.

· Positive volume growth in both UK & ROI and International.

· Group operating profit before exceptional items up 30% to £1,280m; UK & ROI up
60% to £803m.

· Step up in Group operating margin from 1.8% to 2.3%; on track for 3.5-4.0% ambition
by 2019/20.

· Retail operating cash flow up 9% to £2.3bn.

· Net debt of £(3.7)bn, down 27%; £1.9bn of debt repaid within the year.

· Statutory revenue up 3.7% to £55.9bn; PBT down year-on-year after £(235)m exceptional
charge booked post year-end following our agreement with SFO and FCA.

**Six strategic drivers guiding our actions**
 · Brand health at strongest level
in five years.

– Further improvement in core offer, including c.£300m investment in seven exclusive
fresh food brands in March 2016, contributing to sustained market outperformance
in fresh food.

– Price of typical basket down 6% since Sept 2014; promotional participation down
to 32%.

– Most improved food retailer for quality perception; record rating for staff helpfulness
at 80%.

– Availability at record high; simpler range with 24% net reduction over two years.

· Cost savings of £226m already achieved towards £1.5bn medium-term target; FY savings
of £455m.

· Generated £2.3bn retail operating cash; £0.4bn underlying working capital inflow.

· More efficient mix across channels & products; improved service model in 1,500
stores.

· Released £0.5bn value from property; 1.0m sq. ft. space re-purposed; 16 stores
re-purchased.

· Innovated to remove 14bn calories from soft drinks in two years; food donations
up 148% as FareShare FoodCloud now in all large UK stores; PayQwiq digital wallet
used once every 5 seconds.

 

 

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