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Tesco H1 Profit Surges, Says Turnaround Firmly On Track; Resumes Dividend

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Tesco H1 Profit Surges, Says Turnaround Firmly On Track; Resumes Dividend

Tesco has said its turnaround is "firmly on track" after posting a surge in profits in its interim results and resuming dividend payments.

"However CEO Dave Lewis will no doubt argue that in a world where Sainsbury's owns Argos, and Morrisons is flirting with Amazon, he needs to push Tesco on to stay ahead of the game".

"Today's announcement that we are resuming the dividend reflects our confidence that we can build on our strong performance to date and in doing so, create longterm sustainable value for all our stakeholders", said Mr Lewis.

Lewis, who joined just before the scandal was uncovered, said paying the 1 pence interim dividend was a key moment.

United Kingdom and Ireland operating profits leapt 21% higher to £471 million in its first half, while on a statutory basis, group pre-tax profits rose from £71 million to £562 million.

The U.K.'s biggest grocer by market share made a pretax profit of 562 million pounds ($744.5 million) for the 26 weeks ended August 26, compared with a pretax profit of GBP71 million a year earlier.

Pre-tax profit was also up, rising to £562m for the first half compared with £71m for the same period previous year.

Further, the company announced the restoration of the dividend, citing the improved performance in the business and the Board's confidence in its plans.

Tesco has also reduced its net debt from £4.4bn past year to £3.3bn in H1 2017/18.

Mould added that Tesco's still waiting for the latest phase of the Competition and Markets Authority review of its planned £3.7bn merger with wholesaler Booker.

Tesco says it is well on its way to reaching its 2020 forecast, which includes 1.5 billion pounds (1.7 billion euro) in cost-saving measures.

Tesco remains the largest of Britain's supermarket groups by a clear margin, having a market share of nearly 28 percent according to the latest industry figures.

The last payout was in 2014, after the giant admitted to overstating profits by around £250m.

The secret of his success has also been down to working with "fewer suppliers and then us [ing] Tesco's formidable buying power to drive down their prices", according to Ibbotson.

"Tesco appears most at risk" with only 65 percent of its 743 supermarkets in the United Kingdom within 2km of an Aldi or a Lidl which is the lowest percentage among the Big Four grocers, Credit Suisse said, as quoted by Sharecast.

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