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Tesco tops forecasts
LONDON, England (Reuters) -- Britain's biggest food retailer Tesco Plc reported on Tuesday a 14.7 percent rise in annual profits that was at the top end of analysts' forecasts and said it had met its long-held overseas earnings targets. Tesco, involved in a five-way battle to buy Britain's fourth biggest grocer Safeway, said underlying pre-tax profits of 1.401 billion pounds ($2.2 billion) for the year to February 22 compared with analysts' forecasts of 1.337-1.399 billion. Sales grew 11.5 percent to 28.6 billion pounds. Six years ago Tesco launched a four-pronged plan to drive growth in food, non-food, retail services like banking and overseas hypermarkets in places like Asia and central Europe. "Six years on our strategy remains the same. It is no longer the same Tesco,'' Chief Executive Terry Leahy said. "We have faster growth accessing more areas of opportunity and we look forward to growing the business further in a challenging market,'' Leahy added in the results statement. Tesco is expanding more profitable non-food lines like clothing and growing overseas as its domestic market slows. The company said it had achieved its target for emerging markets as underlying operating profits rose 78 percent to 212 million pounds. In Britain, where consumer confidence is slipping, Tesco's like-for-like sales growth was 4.1 percent over the year, with volume growth of five percent. This was slower than the 4.8 percent growth rate the retailer reported in January for the seven weeks to January 4. Last week Sainsbury, Britain's number two, reported underlying growth of just 1.3 percent for its fourth quarter to the end of March, admitting it had lost customers to Tesco. Tesco, which has 296,000 employees around the world, said it would create a further 20,000 jobs this year. Last year it acquired 870 T&S convenience stores and said integration costs would amount to 96 million pounds in the next three to four years. Tesco also said it had a pension fund deficit of 540 million pounds at the year-end, reflecting sliding stock market values. The group proposed a final dividend of 4.33 pence, making a total payout of 6.2p, up 10.7 percent. The company's shares closed at 189-1/4p on Monday, having performed in line with its pan European rivals in the consumer cyclicals sector over the last 12 months. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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