Tesco announced a drop in net profit on Wednesday. The British supermarket giant was penalized by an unfavorable comparison effect following asset disposals a year earlier, but saw its turnover increase.
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Sales, excluding fuel, thus increased by 2.5% to 54.8 billion pounds (66.4 billion francs) during the staggered 2021/22 financial year ended on February 26 and its operating profit jumped by 65 .5% to 2.6 billion pounds, the group announced in a press release.
Net profit was cut by four, to 1.5 billion pounds, following having soared to 6 billion pounds a year earlier on exceptional elements of 5 billion pounds related to the sale of its activities in Thailand , Malaysia and Poland.
The results of the number one in the sector in the United Kingdom benefited in particular from “the drop in costs linked to Covid-19”, mainly due to employees absent because of illness or forced to self-isolate.
All costs related to the pandemic have thus been reduced to 220 million pounds, once morest 892 million a year earlier, notes Tesco.
But “obviously, the external environment has become more complicated in recent months,” warned general manager Ken Murphy.
“With household budgets under pressure, we are focused on controlling the price” of the average basket, “while doing everything we can to reduce our own costs,” he added.
Inflation accelerated further in March in the United Kingdom, to 7% over one year following 6.2% in January, and remains at record levels in 30 years, driven in particular by the rise in petrol, but also by food, according to figures released Wednesday.
However, Mr. Murphy said he was “confident” in the future performance of the group and announced a share buyback program of 750 million pounds over the next 12 months.
This optimism failed to convince investors on Monday morning, with Tesco shares falling heavily by 6.58% to 252.80 pence on the London Stock Exchange around 0800 GMT.
Most indicators however “exceeded expectations”, while Tesco was carried by “the virtuous circle of lower prices which leads to an increase in market share”, in its revenues and in its operating profits, commented Richard Hunter, Interactive Investor analyst.
But “the company is far from immune to rising costs and is also aware of the importance of prices for a consumer increasingly under pressure” from the cost of living crisis, a he added.
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