Tesco PLC (LSE:TSCO) reported full-year revenue and operating profit at the top end of City forecasts but predicted flat profits in the year ahead.
The food retailer reported revenue in the 52 weeks to 25 February 2023 of £65.72bn, up 7.2% from £61.34bn a year before, while adjusted operating profit totalled £2.63bn, down from £2.83bn in the comparative period.
Analysts had forecast revenue of £65.72bn and operating profit of £2.61bn.
On a statutory basis pre-tax profit halved to £1.00bn from £2.03bn while adjusted EPS was flat at 21.85p. The full-year dividend was unchanged at 10.9p.
The grocer said like-for-like (LFL) retail sales rose 5.1% as volumes held up well despite the cost-of-living pressures, with UK LFL sales up 3.3%, ROI up 3.3%, Booker up 12.0% and Central Europe LFL sales up 10.4%.
UK & ROI adjusted operating profit of £2.31bn was down 7%, driven by the impact of lower year-on-year volumes and ongoing investment in its customer offer, with Save to Invest largely offsetting significant operating cost inflation.
Chief executive Ken Murphy said he was pleased with the performance and “confident that we have the right strategy”, but he predicted flat profits in the year ahead.
“We expect to be able to deliver a broadly flat level of retail adjusted operating profit in 2023/24 and retail free cash flow within our target range of £1.4bn to £1.8bn," he said.
"We will continue to prioritise investment in our customer offer whilst doing everything we can to offset the impact of ongoing elevated cost inflation," he added.
Tesco Bank profit is seen between £130mln and £160mln.
The grocer also announced plans for a further £750mln share buyback.