LONDON (Reuters) - Tesco, Britain's biggest retailer, beat forecasts for full-year profit, showing its recovery is picking up pace in a boost to CEO Dave Lewis as he seeks investor backing for his plan to buy wholesaler Booker.
The supermarket group said on Wednesday it made an operating profit before exceptional items of 1.28 billion pounds ($1.60 billion) in the year to Feb. 25 2017.
That was ahead of analysts' average forecast of 1.26 billion pounds, according to Reuters data, and an increase of 30 percent on the 944 million pounds made in 2015-16.
Tesco said UK sales at stores open over a year rose 0.7 percent in the 13 weeks to Feb. 25, its fiscal fourth quarter - a fifth straight quarter of underlying growth.
"We are confident that we can build on this strong performance in the year ahead," said Chief Executive Dave Lewis.
By 2020, Lewis wants Tesco to earn between 3.5 pence and 4 pence of operating profit for every 1 pound spent by shoppers, up from 2.3 pence in 2016-17 as sales rise and 1.5 billion pounds of costs are cut from the business.
The supermarket group needs the results to impress to help it persuade shareholders that it can also make a success of its attempt to buy Booker.
Two of its biggest shareholders last month urged it to drop the 3.7 billion pound bid, saying it was overpaying and the deal was a distraction from its turnaround plan.
Tesco, whose shares have fallen 5 percent this year, says it remains committed to a deal it believes will provide a new avenue of growth when its recovery is secured.
Lewis said on Wednesday the proposed merger would drive additional value for shareholders from substantial synergies, and would enable Tesco to access the faster growing 'out of home' food market.
(Reporting by James Davey, Editing by Paul Sandle)
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