Tesco sees trading profits rise 13%

Tesco has announced pre-tax profits of £3.4bn for the 12 months ending 27 February 2010. Graham Spooner, investment adviser at The Share Centre, comments on the results and explains what this mean to investors.

"Although Tesco makes three quarters of its profits in the UK, it's the international ventures that we think offer investors real growth potential in the longer term and today's results reinforced this. Tesco reported strong growth in Asia with revenues up by 19.7% and announced plans of further store openings in China and the United States.

"Despite an uncertain year for the banking sector, Tesco's banking division has successfully weathered the storm, as trading profits rose 13% to £250m. Tesco Bank, previously 50% owned by RBS, has been a focus of the Group of late and this strategy seems to be working.

"Yesterday, Tesco featured high in our top customer buys as investors pre-empted another solid set of results. Despite Tesco delivering as expected, this morning its share price dropped just over 1% to 430.05p.

"Shareholders should also be pleased with Tesco's decision to raise its dividend to 13.05p, an increase of 9.1%. We continue to list Tesco as a long-term ‘buy' due to its dominant position in the UK and well executed strategy, concentrating on keeping prices down, margins steady and developing international presence."