Tesco investors looking for payout after Asia sale

Tesco shareholders will eagerly be hoping for a payday next week as the company gives them the best behind-the-scenes look at how it coped with Covid-19.

The supermarket’s half-year results will be presented by new boss Ken Murphy, who will only have led the company through six days of the last six months after taking over on Thursday.

Investors will be hoping he might want to impress with a nice payout, slicing up some of the cake from recent big windfalls, such as the sale of Tesco’s Asia business, analysts said.

“Look out for comments on the planned special £5 billion cash distribution once the Thai and Malaysian disposal goes through, that equates to around 51p per share,” AJ Bell investment director Russ Mould said.

Investors will be eagerly eyeing up the dividend that bosses decide to pay out too.

Mr Mould explained that lockdown had increased supermarket sales, as people were unable to go to restaurants and pubs, however, Tesco still lost some ground to its competitors.

“Tesco has lost market share over the past year, albeit only one 10th of a percentage point, according to data from Kantar Worldpanel, in what remains a fiercely competitive market,” he said.

Three months ago shareholders got a peek behind the curtain when the company showed that like-for-like sales had grown by 7.9%, and had shot up even quicker, 8.7%, as online sales soared by nearly half.

However, Mr Mould said this will likely have slowed a little recently.

“It seems logical to assume that the rate of growth eased a bit for the June-to-August period as people began to venture out again and were actively encourage to do so by the Eat Out To Help Out scheme,” he said.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said: “In terms of sales, supermarkets have been among the big winners during the pandemic, as people raced to stock up on lockdown supplies.”

She said that Tesco had managed to steal back some of its lost customers from Aldi through online deliveries.

“But now Aldi is making a bigger move into digital grocery sales so those new customers could well be switching back,” she said.

Analysts expect the company to reach sales of £58.5 billion in the full financial year, a reduction of around £1 billion on a year earlier.

Operating profit is predicted to be £2.2 billion, according to a company-compiled consensus, with profit before tax of £1.4 billion.