The supermarket giant posted bottom-line pre-tax profits of £162m for the year to February 27 against losses of £6.3bn the previous year - one of the biggest losses in UK corporate history.
It also reported a 0.9% rise in UK like-for-like sales in its fourth quarter, which marked its first full quarter of growth since 2013, as the group's recovery under boss Dave Lewis gathers pace.
Lewis said: "We have made significant progress against the priorities we set out in October 2014."
He added: "We set out to start rebuilding profitability whilst reinvesting in the customer offer, and we have done this. More customers are buying more things more often at Tesco."
But he added the group continued to face a "challenging, deflationary and uncertain market".
Its return to the black comes after a grim year when massive property writedowns sent it slumping more than £6bn into the red.
On an underlying basis, the latest set of results showed group operating profits of £944m, up 1.1% on £940m the previous year, when it reported a 68% slump in trading profits.
The group said it had seen annual sales by volume rise for the first time in five years.
Its fourth quarter rise in like-for-like sales growth is a vast improvement on the 1.5% fall the previous three months and follows a bumper Christmas for the group, when it saw a surprise 1.3% jump in sales over the six-week festive season.
Lewis said management actions had "stabilised" the business, which he admitted was in "crisis" when he replaced previous chief executive Philip Clarke in September 2014.
He took over at a grim time, with Tesco uncovering a £326m accounting black hole in autumn 2014 and suffering plunging sales.
Its woes were compounded as trading across the sector was hit by falling food prices, made worse by a price war sparked by the increasing might of discounters Aldi and Lidl.
While the results showed Tesco's trading has turned the corner, Lewis was reluctant to call the end of falling sales, stressing the group continued to trade in "uncertain times".
Tesco added the chain's investment in price cuts would slow its profit improvement, "particularly in the first half".
Under Lewis, Tesco has shut 60 unprofitable stores since the start of its financial year and shelved plans to open a further 49 shops.
He has also cut prices across hundreds of lines, while making a raft of changes such as shutting Tesco's final salary pension scheme, disposing of its loss-making Blinkbox operation selling online videos, and moving its main headquarters from Cheshunt to Welwyn Garden City in a measure expected to save £250m.
On Tuesday he kicked off the next expected wave of asset sales by offloading an 8.6% stake in Singaporean online business Lazada to China's ecommerce giant Alibaba for £91m.
Tesco is also reportedly planning to sell off the Dobbies Garden Centres chain, coffee shop Harris & Hoole and restaurant Giraffe to focus on the main supermarket business, but Lewis declined to comment on the speculation.
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