Tesco 1H18 Earnings: What to Watch

By Ian Walker Features Dow Jones Newswires

Tesco PLC (TSCO.LN), the U.K.'s number one grocer by market share, is scheduled to report results for the first half-year to the end of August on Oct. 4. Here's what you need to know:

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SALES FORECAST: The company is expected to report sales of 27.8 billion pounds ($37 billion) compared with GBP27.34 billion a year earlier, according to Goldman Sachs.

PRETAX PROFIT: Consensus forecasts put adjusted pretax profit at GBP496.3 million compared with GBP352 million for the half-year ended Aug. 27, 2016, based on three analysts forecasts.

WHAT TO WATCH:

DIVIDEND: Tesco has said it will resume dividend payments this fiscal year, but hasn't said when. It last paid a dividend of 1.16 pence in December 2014, a 75% reduction from the previous period as the board sought to cut costs. It subsequently decided not to pay any further dividends, saying future payouts would be considered within the context of the group's performance, free cash flow generation and level of indebtedness. Deutsche Bank expects Tesco to declare an interim dividend of 1.05 pence and a total for the year of 3.5 pence.

PENSION DEFICIT: Tesco reported a pension deficit of GBP5.5 million at the time of its fiscal 2017 earnings in April, up from GBP2.61 billion a year earlier due to the reduction in bond yields following the U.K.'s vote to exit the European Union. It said at the time that the next actuarial valuation was underway and that the trustee was aiming to conclude this as soon as possible.

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BOOKER ACQUISITION UPDATE: Tesco announced in January that it was buying food wholesaler Booker Group PLC (BOK.LN) for GBP3.7 billion in cash and stock. However, the transaction was referred for further investigation by the U.K. Competition and Markets Authority in July as it believed the deal could lead to worse terms for shoppers. A final report is due by Christmas.

Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749

(END) Dow Jones Newswires

October 02, 2017 04:42 ET (08:42 GMT)