Operating profits at the embattled British retailer Tesco more than halved for the first six months of 2015, tumbling from £779m last year to £354m. Despite this, Tesco will be pleased it has made some progress in the past year as pretax profits improved significantly to £74m, compared to a loss of £19m last year.

Although like-for-like sales declined by 1.1% over the period, Tesco said that sales volumes increased by 1.4% and the number of transactions increased 1.5%.

Tesco is currently embroiled in a bitter price war with the other major UK retailers in an attempt to hold market share and win new customers. Chief executive Dave Lewis said that a basket of groceries from Tesco was now 3% cheaper after seven waves of price cuts made by the retailer over the past 12 months.

Unprecedented

Lewis added that the business has undergone an unprecedented level of change over the past year in a bid to shore up the balance sheet. Last month, the group announced it had sold its Korean retail arm, Homeplus, in a deal worth £4.2bn, which was used to pay down some of the group’s £20bn net debt.

He said the aim of the business had been to recover the retailer’s competitiveness in the UK, despite it still being a very difficult market. Tesco also confirmed the group had shelved the sale of its customer analytics business Dunnhumby after it failed to attract sufficient buyer interest. It had been rumoured that US tech giant Google was considering a bid for the business.

In regards to the group’s Irish business, Lewis said it was nice to see Tesco regaining market share in Ireland for the first time since 2013, according to the latest Kantor figures. He added that the group had made significant investments in its Irish business, resulting in an improved trend in both sales and volumes in the six-month period.

Dairy group

Tesco also said it would continue to pay British dairy farmers, who are members of the Tesco Sustainable Dairy Group (TSDG), a premium milk price compared to the average UK milk price that is based on the cost of production.

The retailer added that during the past six months, it had extended the TSDG milk pricing model to its cheese suppliers and announced it will seek to increase the number of dairy farmers within the TSDG by 25%, or more than 150 farmers, by next spring. Dairy suppliers of TSDG currently receive a milk price of 30.93p/litre, significantly higher than the average UK milk price of 24p/litre.