Tesco full-year prof­its rise 28%

The Irish Times - Business - - MARKETS -

Tesco bucked a grim start to the year for the sec­tor with a 28 per cent surge in an­nual profit and a punchy rev­enue growth tar­get for the newly ac­quired Booker whole­sale busi­ness.

Shares in Tesco rose as much as 6.5 per cent yes­ter­day after it con­firmed tar­gets for cost sav­ings, cash gen­er­a­tion and profit mar­gins, and said the in­te­gra­tion of Booker, pur­chased for £4 bil­lion last month, was well un­der­way. The deal will see Tesco ex­pand to pro­vide food to restau­rants, bars and smaller gro­cers, while some £200 mil­lion of an­nual syn­er­gies are tar­geted within three years.

Chief ex­ec­u­tive Dave Lewis also is­sued a new tar­get – in­cre­men­tal rev­enue growth of £2.5 bil­lion from the com­bined busi­ness in the medium term.

He said growth would come from Tesco stores sell­ing Booker goods and vice versa, from new store for­mats, such as putting Booker’s “Chef Cen­tral” pro­fes­sional ca­ter­ing sup­ply busi­ness in Tesco stores, and ex­panded de­liv­ery op­tions. There would also be op­por­tu­ni­ties in Click & Col­lect, mo­bile phones and bank­ing.

Tesco re­mains the largest of Bri­tain’s su­per­mar­kets by a clear mar­gin, with a 27.6 per cent share, ac­cord­ing to in­dus­try data. It is also the fastest grow­ing of Bri­tain’s “big four” along with No 4 Mor­risons.

Tesco made an op­er­at­ing profit of £1.644 bil­lion in the year to Fe­bru­ary 24th – ver­sus guid­ance of “at least” £1.575 bil­lion. Group sales rose 2.3 per cent to £51 bil­lion.

Mr Lewis joined Tesco in Septem­ber 2014, lead­ing a fight­back after sales were ham­mered by chang­ing shop­ping habits, the rise of dis­coun­ters Aldi and Lidl, and an ac­count­ing scan­dal that plunged the re­tailer into the worst cri­sis in its near 100-year his­tory.

Mr Lewis, who joined shortly be­fore the scan­dal was un­cov­ered, first sta­bilised Tesco, then got it grow­ing with more com­pet­i­tive prices, stream­lined prod­uct ranges, bet­ter cus­tomer ser­vice and im­proved sup­plier re­la­tion­ships.

“Tesco is pay­ing a fi­nal div­i­dend of 2 pence a share, giv­ing a to­tal pay­out of 3 pence. An in­terim div­i­dend in Oc­to­ber was its first in three years. – Reuters

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