Tesco saw a rise in profits and sales in 2024 as its market share hit a nine-year high, but warned that it may see lower profits in the year ahead as the supermarket price war heats up.

For the 52 weeks to 22 February, the supermarket giant saw group adjusted operating profit jump 10.6% to £3.13bn, while group sales increased 3.5% to £63.6bn.

Tesco’s market share also hit its highest level in nine years – up 0.67% to 28.3%, with share gains for 21 consecutive four-week periods.

Chief executive Ken Murphy said the grocer’s success was down to its “focus on value and quality, coupled with market-leading availability”.

Throughout the year, Tesco launched over 1,000 new products and improved more than 600, while annual sales of its premium Finest range hit £2.5bn, up 15% year-on-year.

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The retailer also delivered around £510m of savings throughout the financial year through its ‘Save to Invest’ programme, as it simplified operations across the group.

Despite the positive performance, the supermarket expects lower adjusted operating profit for its current financial year. It estimates profits will range between £2.7bn and £3bn. Tesco said the move would provide it with the “flexibility and firepower to be able to respond to current market conditions”.

The grocery giant said that the guidance comes in response to a “further increase in the competitive intensity of the UK market”.

Last month, City sources warned that a supermarket price war is looming, after Asda chairman Allan Leighton said that the grocer was “beginning to see incremental improvements in our price gap“. At the time, Tesco, Sainsbury’s and M&S suffered a hit to their share values.

Murphy added: “Building on our strong financial performance, robust balance sheet and positive momentum, we are setting ourselves up for the year ahead with the flexibility to continue to win in a highly competitive market.

“Despite inflationary headwinds, we are committed to ensuring customers get the best possible value by shopping at Tesco, and see further opportunities to strengthen our competitiveness. By putting customers first, we will continue to create sustainable value for every stakeholder in Tesco.”