A Quick Review of Tesco's Results

LONDON -- Last week, in a preview of Tesco's (LSE: TSCO.L) half-year results, I told you about some of the key numbers to look out for.

The U.K.'s biggest supermarket announced its results this morning, so let's have a quick look at how it did in the first half -- and whether it's on track to meet analysts' forecasts for the full year. The forecasts are the analysts' consensus ahead of the results.

H1 2012/13

H1 Growth

Forecast FY 2012/13

Forecast FY Growth


32.3 billion pounds


67.2 billion pounds


Trading profit

1.6 billion pounds


3.6 billion pounds


Trading margin



Underlying profit before tax

1.8 billion pounds


3.8 billion pounds


Underlying earnings per share (diluted)

17.08 pence


35.1 pence


Dividend per share

4.63 pence


14.83 pence


*Excluding VAT, including petrol.

Overall, the H1 growth percentages are below the rate analysts are expecting for the full year, so a much stronger H2 is baked into the full-year forecast numbers.

It should be relatively easy for Tesco to beat last year's H2 because performance was weak during that period and included an unusually poor Christmas. Nevertheless, the company has something to do after today's H1 numbers if it's to meet analysts' full-year forecasts. I wouldn't be surprised to see those forecasts edging down a bit now.

In the U.K., like-for-like sales (excluding VAT and petrol) -- the key indicator of how management action to turn around the core home supermarket business is going -- were broadly in line with the expectations of the house brokers: namely, a Q2 rise of 0.1%, following Q1's -1.5%.

Internationally, Tesco's U.S. Fresh & Easy business continues to be loss-making at the same 70-odd million pound level as last year's H1. The company has to improve here in H2 to meet the chief executive's prediction earlier this year of a "significant" reduction in losses during the current year.

In the recent past, Tesco has relied on Asia and Europe as the powerhouses for group growth. However, a hefty fall in H1 profits in these regions now leaves the company facing difficulties on many fronts.

Finally, Tesco maintained its interim dividend at the same level as last year -- the first time it's failed to increase the dividend in I don't know how long.

Tesco remains one of the most popular shares with U.K. small investors. It's also a favorite of legendary U.S. billionaire investor Warren Buffett. In fact, Buffett bought a trolley-load of Tesco shares earlier this year.

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