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Tesco: sharp rise in full-year profits thanks to lower inflation

Tesco: 61% jump in profits

British retail giant Tesco posted a strong 61% rise in annual profits to £1.2 billion (€1.4 billion) for the financial year ended February as lower inflationary pressures in the UK brought relief to consumers.

In a statement released on Wednesday, chief executive Ken Murphy emphasized: "Inflationary pressures have eased significantly, although we recognize that many consumers continue to face challenges, prompting us to intensify our efforts to reduce prices."

Murphy further noted, "Shoppers are leaning noticeably towards Tesco, as evidenced by our expanding market share."

Although inflation in the UK has fallen markedly from a peak of over 11% at the end of 2022 to 3.4% in February, it remains the highest among G7 countries.

Tesco's annual sales rose 4.4% to £68.2 billion, with growth of 7.4% when excluding fuel sales, which were negatively impacted by the sharp fall in petrol prices.

The company reported higher sales volumes in the UK and Ireland in the second half of 2023 and expects a slight increase in operating profit this year.

Orwa Mohamad, an analyst at Third Bridge, said, "(Tesco's margins) are growing due to lower inflation and rising consumer confidence. Shoppers are gravitating towards premium goods, and Tesco's investments in robotics and technology to rationalize labor costs are yielding favorable results."

In addition to its Central European operations, Tesco announced plans to raise its annual dividend by 11% and launch a £1 billion share buyback program over the next twelve months.

In February, Tesco announced the sale of its retail banking division to Barclays for £700 million (€818 million). Most of the proceeds will go to shareholders as part of a share buyback program, the company announced.


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