British supermarket chain Tesco Plc (TSCDY.PK, TSCO.L) Wednesday reported a sharp fall in profit for fiscal 2013, reflecting impact of a number of significant one-off charges, including the U.S restructuring and UK property write-downs. The company confirmed exit of its Fresh & Easy business from the U.S.
Philip Clarke, chief executive of the company stated, "The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today."
The U.S operation is treated as discontinued, with restructuring and other one-off costs totaling 1.0 billion pounds. Tesco had identified that the Fresh & Easy business would not deliver acceptable shareholder returns on an appropriate time frame in its current form.
Though the final financial impact of the exit is still to be determined, the firm has written down the assets of the business and booked a provision for ongoing liabilities. The total impact to profit after tax totals 1.2 billion pounds, including 169 million pounds in trading losses and 1.0 billion pounds non-cash items.
Further, following a review of its property pipeline in the UK, the company has written their values down, resulting to a total one-off UK property write-down of 804 million pounds.
The firm also said it faced external challenges, particularly from Europe and Korea.
Announcing its preliminary results for the 52 weeks ended February 23, 2013, the company said its profit before tax more than halved to 1.96 billion pounds, reflecting the impact of several significant one-off charges. On an underlying basis, pre-tax profit from continuing operations were 3.55 billion pounds.
Earnings per share dropped to 1.54 pence from 34.88 pence per share in the previous year. Underlying earnings per share, on a continuing basis, were 35.97 pence per share in the recent year, while it was 40.31 pence a year ago.
However, revenues from continuing operations grew 1.4 percent to 64.83 billion pounds. Group sales, including VAT, improved 1.3 percent to 72.4 billion pounds. At constant exchange rates, sales rose 2.5 percent, including petrol, and 3.1 percent excluding petrol.
UK sales improved 1.8 percent, and International sales were up 4.1 percent from last year. Meanwhile, Tesco Bank revenues dropped 2.2 percent from a year ago.
The board has also maintained final dividend of 10.13 pence per share, giving a full-year dividend of 14.76 pence per share. The final dividend, to shareholders of record on April 26, 2013, is payable on July 5.
In London, Tesco shares are currently trading at 369.5 pence, down 15.35 pence or 3.99 percent, on a volume of 13.67 million shares.
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