Tesco’s Asian business returns massive profit numbers

Tesco’s Asian business achieved a 33.5-per-cent increase in operating profit last year, the last full trading year before it is sold to Thailand’s Charoen Pokphand group. In results released overnight, Tesco reported a profit of £426 million, and a margin of 8.2 percent in Asia, on sales of £5.2 billion, up 6.7 percent on actual currency rates, or by 0.1 percent on a constant-currency basis.

Tesco’s overall result was a pre-tax profit of £1.315 billion, up 18.7 percent year on year, on sales of £56.5 billion, up by 1 percent on a constant-currency basis.

Outgoing CEO Dave Lewis said the performance of the company in the UK and Asia demonstrated the success of the company’s turnaround plan.

“Over the last five years we have focused on serving customers better, re-engaging our colleagues, completely resetting our relationships with our suppliers and as a result we have been able to add value for our shareholders,” he said.

“These endeavors put us in a strong operational and financial position to deal with the challenges of Covid-19.”

But Lewis warned the impact of the coronavirus on the business could be significant and the company would not issue earnings guidance for the current year.

“Covid-19 is having a material impact on the operations of our business and we are incurring significant additional costs, particularly in payroll as we recruit additional colleagues to meet demand and cover the work of those colleagues who are absent and being paid,” he said.

The company has carried out calculations based on various scenarios, which show a negative impact ranging between £650 million and £925 million, including significant cost increases in payroll, distribution and store expenses.