Buoyant sales overseas helped Tesco grow first-half profits despite UK sales staying almost flat over the past six months.

UK like-for-likes rose by just 0.3% in the period to 28 August.

Tesco claimed the UK results marked a “solid performance during a period of unusually subdued industry growth”, blaming low inflation on food and high petrol prices for the sluggish growth.

“Tesco grew sales faster than the market as a whole and achieved a pleasing improvement in profitability, helped by excellent productivity, a stronger sales mix and a strong performance from new stores,” the company said.

Group sales rose by more than 8% to £32.9bn, while profits were up 9% to £1.69bn, including a 30% improvement in Asia.

“The global economic headwinds of the last two years are being replaced by the tailwinds of recovery in most of our markets and this is helping our international businesses,” said outgoing boss Sir Terry Leahy.

“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.”

He added: “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.”

Tesco claimed its Fresh & Easy venture would finally turn a profit by 2013 and announced plans to add another 200 stores in California over the next two years. However, it is to close 13 stores elsewhere in the US, where the retailer suffered losss of £95m for the past six months.

Read more
Tesco mortgage plans delayed by City watchdog (4 October 2010)
Tesco to credit booming Asia for H1 growth (2 October 2010)
Tesco ‘planned 10,000 c-stores in US’ (20 September 2010)