BUSINESS LIVE: Tesco profits near £2.8bn; THG returns to revenue growth; M&C Saatchi earnings slump

Shell’s former boss yesterday fuelled fears that the energy giant will ditch London for New York.

Ben van Beurden said the oil major is ‘massively undervalued’ and the gap between UK-listed stocks and their Wall Street rivals is a ‘major issue’.

Online retailer THG returned to revenue growth in the fourth quarter of last year, as its losses halved.

Full-year revenues fell by around 8.7 per cent to £2billion, but final quarter revenue grew year-on-year.

Its pre-tax loss narrowed from £549.7million to £252 million.

The business said the UK is its ‘key growth market’, with the proportion of its overall sales growing from 42.9 to 45.8 per cent.

Boss Matthew Moulding said:

‘In 2023, we made material progress against our strategic priorities, delivering significant profit growth following the support for our consumers through the cost-of-living crisis in 2022. This focus led to the Group delivering record EBITDA after cash-adjusting items in 2023, higher than at the peak of the pandemic.

‘Having completed our recent infrastructure investment programme, the Group is now delivering operating leverage. Our fulfilment network is becoming increasingly optimised through a combination of robotics automation, AI and the onboarding of new Ingenuity clients utilising existing capacity.

‘The return to Group revenue growth in Q4 was especially pleasing, and this momentum has continued into 2024.’

Rising commodity prices were not enough to prop up the London stock market as defence shares tumbled.

On a subdued day of trading, the FTSE 100 dipped 0.1 per cent, or 8.68 points, to 7934.79 and the FTSE 250 descended 0.5 per cent, or 91.23 points, to 19,763.35.

Brent crude headed towards $91 a barrel and even after giving up its gains it remains up more than 15 per cent so far this year.

Tesco expects even stronger profitability this year after bumper demand lifted 2023 earnings by 11 per cent to almost £2.8billion.

Britain’s biggest supermarket group forecast retail adjusted operating profit, its key profit measure, of ‘at least’ £2.8billion this year, after 2023 earnings beat forecasts of just under £2.5billion.

Group sales, excluding VAT sales tax and fuel, rose 7.4 per cent to £61.5billion, with UK like-for-like sales up 7.7 per cent.

Boss Ken Murphy said:

‘This strong performance reflects the hard work of colleagues across the whole Tesco Group, and their commitment to serving our customers.  Customers are choosing to shop more at Tesco, which is reflected in growing market share as they respond to the improvements we’ve made to the value and quality of our products.

‘Inflationary pressures have lessened substantially, however we are conscious that things are still difficult for many customers, so we have worked hard to reduce prices and have now been the cheapest full-line grocer for well over a year.  We have continued to invest in helping customers where it matters most, cutting prices on more than 4,000 products and doubling down on our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices. 

‘Customer perception of the quality of our products is growing ahead of the market and we continue to win customers from premium retailers, with sales of Tesco Finest now exceeding £2bn.’