UK supermarket giant Tesco has announced bumper profits for its 2018 financial year as margins soared to heights not seen in years.

The retailer announced on Wednesday a 34% increase in full-year operating profit to £2.2bn (€2.6bn). Operating profit margins in the business soared to a very healthy 3.5%, a level not seen since Tesco was at the height of its pomp with almost 40% of the UK grocery market. Tesco said profit margins in the second half of the year were closer to 4%.

Group sales across the Tesco business increased almost 12% year on year to £57bn (€66bn). This was mainly driven by the company’s acquisition of Booker, a wholesale business which added 11% to sales. Tesco said its grocery sales in the UK grew by 1.7%, while sales at its Irish stores grew by 1.3% in the year.

Tesco chief executive Dave Lewis said the strong results indicated that the UK’s largest supermarket had virtually completed its five-year turnaround plan since he took charge in 2015.

“I’m delighted with the broad-based improvement across the business. We have restored our competitiveness for customers and rebuilt a sustainable base of profitability. The full-year margin of 3.45% represents clear progress and the second-half level of 3.79%, even before the benefit of Booker, puts us comfortably in the aspirational range we set four years ago,” said Lewis.

The supermarket announced a full-year dividend of 5.8p per share for 2018, which is a rise of more than 90% compared to the previous year’s dividend payout. Shares in Tesco are up almost 2% in early trading on the back of the results.