Tesco profits rise to £2.65 bn despite UK weakness

Tesco, Britain's biggest retailer, said Tuesday that its annual net profit climbed 14 percent to £2.65 billion (3.0 billion euros, $4.3 billion) as strong sales abroad offset weakness at home. Supermarket giant Tesco, which recently changed its chief executive, said profit after tax for the year to February 26 compared with net income of £2.33 billion in 2009/2010. "I am pleased with our strong overall performance in the face of some challenging conditions and we are well-positioned, with multiple opportunities to deliver long-term growth and rising returns," new chief executive Philip Clarke said in the group's earnings statement. "Asia and Europe made excellent progress contributing nearly 70 percent of our profit growth in the year. The momentum in the USA is building but still has some way to go." Clarke last month replaced Terry Leahy, who stepped down after 14 years at the helm. Going forward, Tesco said its main objective would be to keep growing its British operations, which struggled as Britons faced up to a tough economic climate. Tesco partly blamed record petrol prices and the government's austerity measures for a disappointing British performance. "We didn't achieve our planned growth in the year," the company said. "In some specific countries -- not least of course the UK -- as consumers deal with higher taxes, public sector contraction and rising fuel costs, demand growth remains subdued. "In these markets, we are assuming that the retail environment will remain challenging in 2011," added Tesco, which is the world's third biggest retailer behind US giant Wal-Mart in first and French supermarket group Carrefour. Tesco's share price was down 0.52 percent to 397.94 pence in reaction to the results and shortly after the start of trading, underperforming London's benchmark FTSE 100 index which rose 0.58 percent to 5,904.17 points. Tesco, which has more than 5,000 stores in 14 countries, said annual group sales increased eight percent to almost £68 billion. Pretax profit climbed 11.3 percent to £3.54 billion, ahead of market expectations of £3.45 billion, according to Dow Jones Newswires. Tesco enters a new era after the retirement of Leahy, who turned Tesco from a solid British food retailer into a worldwide operation also selling electrical items, clothes and financial products. Clarke has worked at Tesco since 1974, when he joined as a part-time assistant while still at school. He became chief executive after heading the group's Asian, European and IT operations.