Supermarket group Tesco has unveiled a huge 18.7 per cent increase in first half profits, despite a tough retail environment.

Tesco, the UK's largest supermarket chain posted pre-tax profits of £908m ($1.6bn) for the 24 weeks to August 13.

The company reported an overall turnover of £18.8bn, an increase of 14.1 per cent compared with the same period a year ago.

"By improving the shopping experience for customers in our businesses around the world, we have been able to deliver another good performance in a more challenging year," said chief executive Terry Leahy.

"Looking forward, the accumulating effects of rising oil-related costs, both on consumer confidence and on our business, are a cause for concern, but we remain confident that we will make further progress in the second half."

International sales increased by 25.6 per cent to £4.2bn - while UK same-store sales were up 8.2 per cent.

Non-food sales in the UK were up 13 per cent to £2.8bn, including growth in clothing sales by 15 per cent.

Tesco Personal Finance delivered a £50m profit, while Tesco Mobile customers reached 750,000.

Meanwhile its online business has continued to grow. Tesco.com saw sales grow by 34.1 per cent to £401m, with profits up 37 per cent to £21m.

Tesco operates more than 2,300 stores in 13 countries including Japan, South Korea, Taiwan, Turkey, Hungary, Slovakia and Poland.

The company said it plans to create 9,500 jobs worldwide in the second half of the year, including about 7,500 in the UK.