Bumper summer and Booker buyout set to boost Tesco profits
Tesco will be hoping to post strong first-half profits on Wednesday, as a blistering summer heatwave, successful World Cup run and a royal wedding are all likely to have boosted the firm’s performance.
Consensus estimates compiled by S&P Global Market Intelligence show that earnings before tax (excluding exceptions) could hit £795m in the first six months of 2018, marking a steep rise from £639m in the previous six months.
The retailer is likely to be bolstered by its £4bn acquisition of cash-and-carry chain Booker in March, with profits from the food and drink wholesaler included in Tesco’s half-year results for the first time since the takeover.
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The interim results come after a busy year for the groceries giant, which also launched its new Jack’s discount chain earlier this month in a bid to ramp up its competition with discounters and online rivals.
Pressure to capture more consumers has also swelled in the wake of a potential £12bn merger between Sainsbury’s and Asa that is currently being reviewed by the UK’s competition watchdog in a deal that would create a retailer more powerful than Tesco.
Tesco shares have outperformed most other companies in the FTSE 100 so far this year, rising 15 per cent as investors seemed to buy into boss Dave Lewis’s turnaround vision for the firm.
Lee Wild, head of equity strategy at interactive investor, said: “It’s early days, so any data we do see in these second-quarter results indicates nothing more than initial curiosity among budget conscious shoppers.”