Tesco shrugs off tough UK market

5th Oct 2010 07:10

Supermarket giant Tesco's first half profits surged 12% despite sluggish underlying sales in the UK.Pre-tax profits rose to £1.6bn in the half year to August on sales up 8.3% to £32.9bn including VAT.All regions saw an improved trading performance in the second quarter over the first Tesco said. Group sales rose by 8.8% over the last three months. Total international sales increased by 16.8% while total UK sales grew by 5.3%, including VAT and petrol.Stripping out petrol and adjusting for VAT, like-for-like sales in the UK were up just 0.3% in the first half, comprising 0.1% growth in the first quarter and 0.4% growth in the second. Total sales grew by 3.3% in the first half reflecting new openings."In the UK, we have coped very well with subdued demand and modest levels of industry like-for-like growth, helped by excellent productivity, a pleasing performance from new stores and good growth from our Services businesses, particularly online and Tesco Bank," outgoing chief executive Terry Leahy said. He said the UK picture would have been better with out the big rise in petrol prices, which he said took "an extra £20 a month out of families' budgets."Overseas, Tesco showed strong growth helped by the 'tailwinds of recovery' in most of its markets.Asian trading profits grew by 30% to £228m, while continental Europe's contribution rose 11% to £212m."Our important Asian markets in particular are emerging strongly from recession and we are now benefiting from the substantial investment we continued to commit to the region during the downturn," Leahy added.The US grocery business, Fresh & Easy is now set to break even in 2013, having lost £95m in the first six months of this year.Tesco Bank profits rose 12% to £129m with a fixed-rate savings account due to launch this month.The interim dividend rises by 12% to 4.37p.