Sales at Tesco’s operations in Asia and continental Europe grew faster than in the supermarket group’s core UK business last year.
Tesco, which is about to expand aggressively in the US, said on Tuesday that sales in Asia rose by 16.8 per cent to £3.9bn (€5.6bn), and in continental Europe, they rose by 14.6 per cent to £5.2bn. But UK sales rose by just 10.7 per cent to £32.7bn.
Overall, the international division – which accounts for about a fifth of profit and sales – saw turnover grow by 23 per cent to £9.16bn. Operating profit rose 17.4 per cent.
Sales at Tesco.com, its online business, grew by nearly 32 per cent in the year to almost £1bn, and profits there increased by 55 per cent to £56.2m.
Tesco plans to carry out the largest sales and leaseback programme in British corporate history as it looks to return some cash to shareholders.
After delivering an 18 per cent rise in pre-tax profit to £2.2bn in the year to the end of February, Tesco said it would raise up to £5bn over the next five years and would spend £1.5bn of the proceeds to buy back shares.
The UK’s leading retailer said that it had no concrete plans for the remaining £3.5bn, although this could well be used to fund more expansion overseas, given that it is investing £250m a year into the US, as well as eyeing Carrefour’s stores in Korea and a potential tie-up in India.
David Reid, chairman, said Tesco, had taken the decision to shore up the shares after listening to shareholders. “They want to see us deliver the same for shareholders as we do for customers,” he said. “It demonstrates we are listening.”
The news came as chief executive Sir Terry Leahy reported underlying sales in the final seven weeks of the financial year at 4 per cent, against 4.9 per cent for the quarter, which Merrill Lynch said was Tesco’s lowest level since 2002.
Sir Terry said Tesco had been affected by the resurgence of Sainsbury, the UK’s third-largest supermarket chain. He said he expected underlying sales growth to be 3-4 per cent this year.
Group revenues on continuing operations rose by 16.5 per cent to £39.5bn, while pre-tax profits rose 18 per cent to £2.24bn.
Operating profit rose by 16.8 per cent to £2.3bn. The board proposed a final dividend of 6.1p per share bringing the full year dividend to 8.63p, up by 14.2 per cent from last year.
Group earnings per share were 20.2p, up 15.3 per cent.
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