Tesco continues to surge ahead - Tesco PLC profits - Brief Article - Statistical Data Included

Eurofood, Sept 27, 2001

The UK's leading supermarket retailer Tesco has posted its interim results, providing further evidence of its dominance in the UK supermarket sector.

Having last year posted record profits of some 1bn [pounds sterling] (1.59bn [European Dollar]), Tesco saw profits at the half-way stage hit 417m [pounds sterling], an increase of 14% compared to the same period last year. Turnover was also up, recorded at 11.5bn [pounds sterling] compared to 10.1bn [pounds sterling] for the 24 weeks ended 11 August.

In Tesco's core market, the UK, sales grew by 10% to 9.8bn [pounds sterling] compared to 8.9bn [pounds sterling] last year, of which 7.0% came from existing stores and 3.0% from net new stores. Existing store growth was driven by strong volumes of 6.9%.

UK operating profit was 12.1% higher at 501m [pounds sterling] up from 447m [pounds sterling]. Tesco, along with other mega-businesses, have in the past come under criticism, especially having posted record profits while the UK's farmers were struggling with foot-and-mouth disease. However, the UK firm says it compared prices every week on over 66% of its total sales, which revealed that its prices are 12.5% cheaper than they were five years ago.

Expansion continues apace at Tesco's, with the supermarket group opening two new distribution centres creating over 1 000 jobs.

Its store development programme is also on track, with 13 new stores opened at the halfway stage. Tesco also opened eleven Express stores as it aims for 150 stores by the end of 2002.

Tesco is also on track to bag a 6% share of the non-food market.

INTERNATIONAL SALES

On an international scale, sales grew by 46% to 1.7bn [pounds sterling] and contributed 33m [pounds sterling] to group profits, up 120% on last year. In the rest of Europe, sales rose by 32% to 1.1bn [pounds sterling] and contributed an operating profit of 24m [pounds sterling], up 85% on last year.

Within this, sales in the Republic of Ireland were ahead 7.8% on the previous year. In Central Europe total sales were strong, up 48%.

In Asia, sales were up 76% to 652m [pounds sterling] and Tesco posted a profit of 9m [pounds sterling] up from 2m [pounds sterling] in the first half last year.

Trading profits in Thailand and South Korea have been partly offset by start up losses in Taiwan. Tesco also said it was continuing to research other international opportunities in Asia, including China and Japan.

Tesco H1 group turnover (m [pounds sterling])

                         2001     2000   %+/-

Food retailing          9 796    8 904   10.0
Property development       --        4     --
Total UK                9 796    8 908   10.0
Rest of Europe          1 063      806   31.9
Asia                      652      370   76.2
Group                  11 511   10 084   14.2

Source: Tesco

E-COMMERCE

Tesco.com in total achieved sales of 146m [pounds sterling] up 77% on last year. Grocery home shopping delivered good profits, however overall tesco.com made a small loss of 3m [pounds sterling] in the first half, reflecting the launch cost of new sites such as its wine warehouse. However Tesco.com has made excellent progress and now reaches 94% of the UK population.

In June Tesco announced plans to take its successful grocery home shopping system to the US where there is 60% Internet penetration as opposed to 35% in the UK.

Tesco would have potential access to some 150 million people through 1 500 Safeway Inc shops.

Chief executive officer at Tesco, Terry Leahy, said, "These results underline the strength of our four part strategy -- a strong core UK business, non food, retailing services and our international business plus the commitment of the whole Tesco team to create continued value for our customers