Tesco profit jumps 20% to $3.8b on strong sales

LONDON: British supermarket giant Tesco said on Tuesday that net profits soared by a fifth in 2006 to a record £1.892 billion (e2.8 billion, $3.8 billion).

Net profits leapt by 20.5% to reach the record level, which compared with a figure of £1.570 billion in 2005, Britain’s biggest retailer said in its annual earnings release.

Tesco — which has 3,000 supermarket branches worldwide including 1,800 in Britain — said revenue rose by 8.1% to £42.6 billion, driven by strong sales in Asia, eastern Europe and its home market.

Pre-tax profits leapt by 13.2% last year to £2.5 billion, which was at the top end of market expectations. Alongside the results, Tesco said it would create 25,000 new jobs around the world this year.

The group will also return “at least” £3 billion to shareholders in 2007, compared with the £1.5 billion announced previously.

“Tesco is investing for the future and delivering today,” said Tesco chief executive Terry Leahy in comments accompanying the release.

“These results demonstrate that we have again made good progress across the group, whilst making significant start-up investment in new businesses and coping well with challenging conditions in some markets.”

Tesco is the world’s third-biggest retailer behind French supermarket Carrefour and US giant Wal-Mart, which is out in front.

Tesco accounts for one third of the total retail market in Britain — equal to the combined sales of its two nearest rivals — Wal-Mart unit Asda and Sainsbury.