Tesco has raised the lower end of its annual profit guidance and increased its share buyback after reporting a better-than-expected a 6.5% rise in interim operating profit to £1.78bn.

The UK's largest supermarket now expects group adjusted operating profit of between £3.15bn and £3.30bn, compared with its previous £3bn to £3.3bn range. It also increased its current-year share buyback programme to £950m from £750m, supported by its strong balance sheet and cash generation.

Group like-for-like sales rose 1% in the six months to 29 August, including 1.5% growth in the UK, where food sales increased 2.4%. Group sales rose 1.6% at constant exchange rates to £33.8bn, while adjusted diluted earnings per share increased 12.2% to 17.3p.

UK and Ireland adjusted operating profit rose 6% to £1.56bn, supported by an improved sales mix, cost savings and growth in newer income streams including Tesco Media and Whoosh. Central Europe profit increased 38.4% to £63m, while Booker profit was broadly flat at £163m. Online sales increased 8% and Whoosh sales rose 37%.

New products, personalised offers and its meal-planning assistant helping the retailer maintain its market position. The supermarket is also expanding its digital and AI capabilities, with more than 7,500 digital screens across the group and the rollout of an AI-powered meal planning assistant to customers.

It delivered £251m of savings in the first half and remains on track for its £500m full-year Save to Invest target.

Shares in Tesco were up around 4% to 5% on Thursday.

Tesco CEO Ken Murphy said: “Our strong performance enables us to keep investing in the customer offer and the capabilities that will drive future growth. Against an uncertain external backdrop, we have continued to invest in giving customers the very best value for money.

"Our focus remains on helping customers get the best possible value from their weekly shop. By putting customers first and delivering against our strategic ambitions, we will continue to create long-term value for all our stakeholders.”

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