Group profits decline at Tesco

Tesco has reported its first group profit decline inalmost 20 years, but said its Irish operations performed well in the first half of its current financial year.

The supermarket giant doesn’t break out separate figures for its Irish division, but within its interim group results presentation — covering the six months to the end of August — said, yesterday, that Tesco Ireland had seen year-on-year sales growth, but stagnant profit performance.

“The Republic of Ireland was one of the markets first and most profoundly affected by the financial crisis and subsequent recession.

“Our business, there, performed well in the first half this year, delivering two successive quarters of positive like-for-like sales growth, albeit profit performance remained subdued,” the company said.

The company has more than 110 stores in the Republic and employs around 13,000 people here.

Earlier this year, Tesco issued a profit warning — its first in nearly two decades — following a poor performing Christmas period at its core British division, which still contributes 60% of group trading profit.

Duly, the company yesterday reported a first half group pre-tax profit of £1.7 billion (€2.1bn), down by nearly 12% on a year-on-year basis, marking its first profit decline for 18 years.

However, group sales were up by 1.4% year-on-year at £36bn and revenue growth was evident across each of its main geographical divisions — including a 2.1% rise in Britain, a 16.7% jump in the US and a 3.6% increase in Europe.

Tesco chief executive, Philip Clarke said that the previously announced plan to overhaul and modernise its store offerings in Britain is well underway and has been initially well received by consumers.

Reflecting that progress, management has recommended an interim dividend of 4.63p per share, unchanged on the 2011 half-year shareholder pay-out.

Meanwhile, first half revenue at Tesco Bank — the group’s financial servicesdivision — fell by 1.5%, year-on-year, to £514m;although trading profit was up by nearly 114% to £94m.

There are still no plans for Tesco to increase its financial offering to Irish customers, past its home/pet/car insurance offering, however.