Tesco: first-half profits drop 7%

British supermarket giant Tesco said Wednesday that net profits slid almost seven percent in the first half of the group's financial year, hit by tough economic conditions in Asia and Europe. Earnings after taxation slid 6.8 percent to £1.283 billion ($2.067 billion, 1.6 billion euros) in the 26 weeks to August 25, compared with the same period of the company's previous fiscal year, Tesco said in a results statement. Pre-tax profits meanwhile slumped 12 percent to £1.7 billion in the reporting period. "The external environment continues to present challenges all over the world," said chief executive Philip Clarke. "Whilst our businesses in Asia and Europe have continued to do a great job for customers, our financial performance there reflects the tough economic backdrop and particularly the regulatory changes in South Korea." Market expectations had been for net profit of £1.375 billion, according to analysts polled by Dow Jones Newswires. Overall group sales however increased by 1.4 percent to £36 billion. Profits were also hit by the cost of a £1.0-billion turnaround programme which was launched in April in a bid to transform the fortunes of its ailing domestic activities. Tesco added Wednesday that sales at British stores open for at least a year fell by 0.7 percent in the first half, excluding petrol and sales tax, compared with the same period a year earlier.