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Tesco forecasts full-year profit slightly ahead of expectations

Tesco said it intended to pay a final dividend of 2 pence per share for the year
Tesco said it intended to pay a final dividend of 2 pence per share for the year

Tesco said today that Booker boss Charles Wilson would stay on and run its entire UK business once it completes the £3.7 billion takeover of the wholesaler. 

Tesco also forecast profit for 2017-18 would come in slightly ahead of analysts' expectations, adding it had traded in line with management expectations since it last updated investors on January 11. 

Tesco's purchase of Booker is the boldest move yet by its chief executive Dave Lewis, who took over in 2014.

The deal will provide the supermarket group with access to the faster growing catering segment of Britain's £195 billion food market. 

After completion of the deal, Wilson, who has led Booker since 2005, will become CEO of Tesco's retail and wholesale operations in the UK and Ireland. The division made up 63% of Tesco's profit in the 2016-17 year. 

Wilson's appointment, although not a surprise, puts the 52-year-old in pole position to eventually take over from Lewis, analysts said. 

"Charles Wilson brings substantial commercial and retail experience and has an exceptional track record of increasing performance and driving growth in customer-focused businesses," Lewis said.

Named the 2017 Sunday Times Business Person of the Year, Wilson is credited with pulling Booker bank from the brink when he took over the top job at the loss-making company.

He previously held roles at Procter & Gamble, Arcadia and Marks & Spencer. 

While some shareholders remained sceptical about Tesco's move to buy Booker, several told Reuters at the time that they welcomed the chance to bring Wilson into the fold.

Tesco's current UK boss, Matt Davies, will step down at the end of April, when he will have been in the role for three years.

Wilson will receive a base salary of £575,000, an annual bonus of up to 200% of salary and an annual performance share plan award of up to 225% of salary. 

Lewis had a total remuneration package worth £4.15m in the 2016-17 year. 

Tesco shareholders will vote on the Booker deal at a meeting on February 28 and completion is expected to take place on March 5. 

The supermarket group forecast an operating profit before exceptional items of "at least" £1.575 billion for the year to February 24 2018. 

That compares to analysts' current average forecast of £1.564 billion and £1.28 billion made in 2016-17. 

Tesco also said today it intended to pay a final dividend of 2 pence per share for the year, having announced an interim dividend of 1 pence in October. 

It had previously guided to a one-third, two-thirds split between the interim and final dividend. 

The interim payment was its first since the 2014-15 year when it was mired in crisis.