Tesco is expected to announce record profits next week of £2.2bn as it reveals year-end results that continue to leave rivals in its wake.

It comes as Tesco denied trade rumours that a middle management restructure was due to take place. Industry analysts were confident that Tesco would meet market expectations, reporting group sales of £38bn and pre-tax profit of £2.16bn-£2.2bn for the year to March 31, driven by a strong performance in the UK.

They also said that the company would continue to lead the UK market with like-for-like sales growth, excluding petrol, of about 5.7% in the second half of the year.

This would mean that Tesco is likely to beat Sainsbury's fourth-quarter like-for-likes, which were 5.3% for the 12 weeks to March 25. Sainsbury chief executive Justin King had hoped these would be market-beating figures.

Expansion in non food and services such as finance, mobile phones and Tesco.com are set to dominate the year ahead for Tesco, added analysts.

Cheuvreux analyst Mike Dennis said: "Diversification has been one of the pillars of Tesco's strategy. So its aim would be to expand further there."

Tesco's global operations are expected to rise in importance, even though the UK market accounts for more than 80% of profit and has historically generated higher operating margins. Jerome Samuel, an analyst at Ixis, said the international results would hold important clues for Tesco's future, as it would need better margin and profit growth to offset slowing growth in the UK.

Topics