Tesco has reported a 12.5% increase in group pre-tax profit in its interim results, with international sales helping to offset the subdued growth in the UK.

The grocer has also said its loss-making US business Fresh & Easy is expected to reach profitability during 2012/13.

For the 26 weeks to August 28, group pre-tax profit hit £1.6bn. Group sales excluding VAT were up 7.1% to £29.8bn. In the UK, sales including VAT were up 5.9% to £21.9m. UK like-for-likes excluding petrol and adjusting for VAT were up 0.3%, comprising 0.1% growth in the first quarter and 0.4% in the second.

Chief executive Sir Terry Leahy, said: “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 to resume strong sales and profit momentum. 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.

“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. Economic recovery in the UK is slow and steady and I believe our investment in making the shopping trip even better for customers means that Tesco is well-placed to grow in this environment.”

In all regions it reported improved trading in the second quarter compared to the first. International like-for-like sales growth was 4.1% in the second quarter compared with flat in the first, with 5% growth in Asia and 3.1% growth in Europe. In the US, sales were up 44.9% at constant exchange rates, with like-for-likes at 12.2%.

In non-food, group sales rose 4.8% during the first half to £6.5bn. In the UK, non-food sales grew 2.5% to £4.4bn with a stable like-for-like performance in the first half. In clothing in the UK, Tesco said it grew ahead of the market with a “particularly strong performance” in menswear and childrenswear, helped by Back to School.

In Europe, clothing sales increased 12% and it is now market leader in Hungary and Czech Republic. It has introduced F&F Blue and F&F Basics sub-brands in Europe and opened its first standalone clothing store in Prague last week.

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