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April 8, 2020, 2:38 a.m. EDT

Tesco profit falls on higher spending

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By Matteo Castia

Tesco PLC said Wednesday that pretax profit for fiscal 2020 fell on higher expenses and that it expects impairment charges from the coronavirus pandemic of up to 925 million pounds ($1.14 billion).

The U.K.'s largest grocer by market share made a pretax profit of GBP1.32 billion for the year ended Feb. 29, compared with GBP1.62 billion in fiscal 2019.

Revenue rose to GBP64.76 billion in fiscal 2020 from GBP63.91 a year earlier, while sales--excluding VAT and fuel--rose 1.1% year-on-year to GBP57.37 billion.

Adjusted profit--one of the company's preferred metrics which strips out exceptional and other one-off items--was GBP1.96 billion. This was up from GBP1.56 billion in the previous financial year.

The board declared a final dividend of 6.50 pence, for a total yearly payout of 9.15 pence, compared with 5.77 pence a year earlier.

"Covid-19 is having a material impact on the operations of our business and we are incurring significant additional costs, particularly in payroll as we recruit additional colleagues to meet demand," the grocer said.

However, it said it is likely to offset additional headwinds to cost, thanks to an increase in food volumes.

Tesco confirmed its plan of returning GBP5.00 billion to shareholders by way of special dividend and to make a one-off GBP2.50 billion pension contribution to reduce indebtedness.

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