Asda recorded a 7.6% rise in underlying operating profit last year after the grocer won shoppers through its low-price offer and fine-tuned its operating model.

Underlying operating profit rose to £1.1bn as group revenues increased 4.6% to £22.8bn in the year to December 31, 2012, according to Companies House accounts released to Retail Week.

Operating profit edged down 0.6% to £840.9m due to a number of one-off benefits in the prior year.

Like-for-like sales excluding petrol and VAT rose 1% in 2012 at the Walmart-owned retailer.

Asda chief financial officer Richard Mayfield told Retail Week the result was positive against the backdrop of consumer conditions. He said: “The economy was pretty tough last year, in January we were talking about a triple dip recession. The consumer theme for three years was that prices had been rising broadly three times more quickly than wages.

“We are happy that on price we are both leading and have significantly increased the gap to major competitors.”

Mayfield said Asda’s internal ‘We Operate for Less’ programme had boosted profits through cutting supply chain and store operations costs, primarily driven by advances in technology.

Asda said investments in low prices on essentials, improving quality, reviving its fish counter offer and broadening its multichannel options had all driven sales and profit.

Since year end, Asda reported a 1.3% rise in like-for-likes in the first quarter to April 14, 2013 and a 0.7% increase in the second quarter.

Asda is battling a ferociously competitive market environment in which its market share to 17.3% in the 12 weeks to September 15 from 17.6% the prior year, Kantar Worldpanel reported.

Mayfield said: “The market as a whole has got weaker the last couple of months. The biggest shift competitively has been Tesco which has launched a lot of new things and done a lot more vouchering.

“It’s a diluted investment from their perspective although I understand why they do it. That has impacted us but we stick to a long term low price strategy.”

Mayfield said the “majority of the hard work has been done” on Asda’s strategy review, which it is formulating with consultancy McKinsey, as the grocer plans for a future where digital retail is increasingly important.

The accounts showed Asda’s cash tax was £176m in 2012, up £13m on the prior year. Mayfield said he was “confident” the US-owned retailer paid an appropriate amount of tax amid controversy over tax paid by large corporations.

He said: “We pay broadly the effective corporative tax rate. We do not put ourselves in with large corporations who pay practically nothing.”