Tesco’s pre-tax profit slides to £825 million in fiscal 2021

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Apr 14, 2021
  • Tesco’s pre-tax profit slides to £825 million in fiscal 2021.
  • The British grocer appoints two new non-executive directors.
  • Tesco plc declares 5.95 pence per share of a final dividend.

Tesco plc (LON: TSCO) said on Wednesday that its profit before tax posted a decline in fiscal 2021, attributed to the increased costs due to the ongoing COVID-19 crisis. The company, however, expressed confidence that lower spending in fiscal 2022 will help improve profitability.

Tesco shares opened more than 2% down on Wednesday and tanked another 1% in the next hour. Including the price action, the stock is now exchanging hands at 226 pence per share. In comparison, the UK’s largest supermarket chain had started the year 2021 at a much higher 300 pence per share.

Tesco declares 5.95 pence per share of a final dividend

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Tesco reported £825 million of pre-tax profit for the year that concluded on 27th February. In 2020, its profit before tax stood at a much higher £1.32 billion. The British multinational valued its revenue at £57.9 billion in fiscal 2021 versus the year-ago figure of £58.09 billion.

The general merchandise retailer’s board declared 5.95 pence per share of a final dividend on Wednesday, translating to 9.15 pence per share of a full-year pay-out that remained unchanged from last year. In its earlier report published in January, Tesco had posted an 8.1% increase in comparable sales in the Christmas period.

The British grocer acknowledged higher administrative and exceptional costs in 2021. It also warned of lower sales in the ongoing year but expressed confidence that profitability will improve as the Coronavirus-related restrictions begin to ease.

Tesco appoints two new non-executive directors

Tesco appointed two new non-executive directors on Wednesday; Thierry Garnier, who will assume the role on 30th April, and Bertrand Bodson, who will join from 1st June. In separate news from Europe, Norwegian Air said it will raise additional cash before bankruptcy exit.

In a statement on Wednesday, Tesco said:

“Whilst we expect some of the additional sales volumes, we have gained this year in our core U.K. market to fall away as Covid-19 restrictions ease, we expect a strong recovery in profitability and retail free cash flow as the majority of the additional costs incurred as a result of the pandemic in fiscal 2021 will not be repeated.”

Tesco performed downbeat in the stock market last year with an annual decline of more than 10%. At the time of writing, the Welwyn Garden City-based company has a market capitalisation of £17.43 billion and a price to earnings ratio of 15.73.

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