Tesco PLC (LON:TSCO) topped the blue chip gainers board in early trading after the supermarket giant announced it is to pay a dividend for the first time since 2014-15, when it was rocked by an accounting scandal, as the firm posted strong growth in first half profit.
In early morning trading, Tesco shares were up 1.6%, or 2.95p at 193.00p.
READ: UK supermarkets sales up by over 3% for sixth month, with Tesco again leading the ‘Big Four’
Independent retail analysts Nick Bubb said: "Apart from the poor sales in Asia (attributed to reduced discounting), there’s not a lot to pick holes in and the City should be pleased with the news first thing."
Reporting results for the six months to August 31, the FTSE 100-listed firm saw a 27.3% jump in operating profit before one off items to £759mln, up from £596mln a year earlier and beating the consensus forecasts for around £700mln.
The profit boost came as the UK’s biggest retailer posted a seventh straight quarter of underlying sales growth, with group sales up 3.3% to £25,2bn and UK like-for-like sales growth of 2.2% helped by fresh food volume of 1.5%.
Earlier resumption of payouts than some had expected
Tesco, which in January agreed to buy wholesaler Booker PLC (LON:BOK)for £3.7bn, declared an interim dividend of 1p, an earlier resumption of payouts than some analysts had expected.
Dave Lewis, Tesco’s chief executive said: “Today's announcement that we are resuming our dividend reflects our confidence that we can build on our strong performance to date and in doing so, create long-term, sustainable value for all of our stakeholders."
Tesco also announced that its triennial pension review has been concluded, with annual contributions to increase by £15mln to £285mln from April 2018.
-- Adds share price, analyst comment --