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Tesco profits rise to £2.85 billion

15/04/2008

Tesco has reported an 11.8 per cent rise in underlying profit to £2.85 billion on group sales of £51.8 billion for 2007 on strong international sales.

The grocery chain confirmed sales in the US are ahead of expectations, although some new stores will be delayed due to the weak property market. There had been concerns that Tesco's US venture, Fresh & Easy, was struggling.

UK sales increased 6.7 per cent to £37.95 billion but sales in countries outside Tesco's core market grew rapidly over the year. According to Tesco, 50 per cent of the group's trading profit was from international sales.

European sales were up 23.9 per cent to £7.84 billion, Asia sales rose 27.2 per cent to £5.99 billion and the company's international segment rose 25.3 per cent to £13.82 billion.

Terry Leahy, chief executive, said: "We begin the new financial year confidently - with a good start in the UK, excellent progress in our established international markets and promising early performance from our investments in future growth, particularly in the United States, China and Turkey."

In the UK, Tesco said excluding petrol, like-for-like sales grew by 3.5 per cent over the year. Overall, the supermarket chain saw modest inflation of 1.2 per cent in its stores as a rise in food costs was offset by deflation in non-food categories.

Non-food sales were particularly strong, up 8.7 per cent, as were online sales which were up 30.9 per cent.

Tesco Personal Finance profits were flat this year after absorbing £31 million of additional home insurance claims linked to last summer's severe floods in Yorkshire and the Thames and Severn valleys.