Tesco's chief executive yesterday responded to critics who blamed supermarkets for the current crisis in British farming as he revealed record £1 billion sterling (€1.6 billion) profits at the country's biggest grocer.
The foot-and-mouth epidemic sweeping Britain was "not of our making", Mr Terry Leahy said. The country had to learn to appreciate companies that did well. "It is important for Britain that we are comfortable with successful businesses," he said.
Tesco profits for the 12 months to February 24th jumped 12.9 per cent compared with a year before to £1.05 billion on sales up 11.7 per cent at £20.98 billion, in line with City expectations. The news prompted fresh criticism of the group, coming in the wake of the troubles that have effected the farming industry even though the results only took in one week of the foot-and-mouth crisis.
Tesco sales in the Republic last year were ahead 6.7 per cent ahead of sales for the previous year, the company said. Its market share rose by 2 per cent to 24 per cent in the same period, it said. Tesco opened stores in Maynooth and Castlebar last year and said it would open a further five stores this year and early next year. "Now that the planning rules have been clarified, we expect to open more stores within this framework," the company said in a statement.
Earlier this year, the Minister for the Environment and Local Government Mr Noel Dempsey extended the floor space cap in Dublin from 3,000 square metres to 3,500 square metres. The 3,000 square metres limit outside the Greater Dublin area remains.
In Britain, the National Farmers' Union said its members would find the profit levels hard to understand. However, Mr Leahy said Tesco had done much to support the rural economy. He blamed the crisis in British agriculture on falling world commodity prices, the strength of sterling, which had reduced the value of subsidies, and export bans.
The group pointed to its operating margin, steady at at 6 per cent, as evidence that it was not profiteering.
Analysts agree. "There is absolutely no evidence that the supermarkets are profiting from foot-and-mouth," said one. "In fact, quite the reverse. Meat prices in shops may have gone up by 10 per cent, but the cost to retailers to sourcing that meat has gone up by more than that."
