New Tesco chief executive Ken Murphy has signalled that he is likely to continue his predecessor’s dividend policy after declaring a 20 per cent increase in the half year payout.
Shareholders will receive 3.2 pence per share, up from 2.65p last year, the UK’s largest supermarket group said on Wednesday. The increase, which means that the interim payout is just over a third of the last full-year dividend, is in line with policy, the retailer added.
In April, Tesco’s decision to declare a full-year dividend in the midst of the coronavirus pandemic attracted widespread criticism. Rival Sainsbury has still not decided whether to pay out in respect of last year’s earnings.
For the half-year to August 29, Tesco reported group sales of £26.7bn, up 6.6 per cent from last year, with a hefty increase in food sales offsetting a steep drop in fuel as the UK’s lockdown kept drivers off the roads.
Adjusted pre-tax profit was £717m, down 18 per cent after the group absorbed more than £500m of additional costs relating to the coronavirus pandemic, including hiring additional staff and instigating social distancing measures in stores.
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The figures do not include a contribution from Tesco’s Asian operations, which are in the process of being sold.
Tesco’s banking unit made a loss of £155m due to a reduced level of new business in loans and credit cards, lower unsecured lending and credit card retail balances, and significantly lower income from cash machines and travel money. There was also a large provision against expected losses from bad loans.
Tesco shares climbed 3 per cent in early trading.