Tesco’s Irish arm responsible for profit overstatement of nearly €90m
27 April 2015 | 0
It has been revealed that an overstatement of profits worth £63m (€88m) at Tesco occurred in the retailer’s Irish arm of its business.
Last September Tesco made the shock announcement that it had overstated profits to the tune of £250m (€347.5m). The majority of this was made up of supplier payments worth €201.5m which had been incorrectly recorded as profits.
In the retailer’s full-year results announced last week, Tesco reported an extra profit adjustment from its treatment of supplier payments of £63m (€88m) to £208m (€289m).
ShelfLife contributor Dan White revealed in the Sunday Independent that Tesco Ireland confirmed that all of this increased profit adjustment occurred in this country, stating: “The additional amount related to income in the Irish business”.
White wrote: “Irish suppliers to Tesco have long complained privately about the payments demanded by the retailer to stock their products. The latest results statement gives the first indication of the extent of these payments. It also seems to show that payments from suppliers to Tesco Ireland are far higher than those demanded by its UK parent.”
Although the original £145m profit overstatement caused by supplier payments amounted to just 0.33% of Tesco’s UK sales, the latest £63m adjustment equals 3.1% of Tesco’s Irish sales. The Irish profit adjustment is subsequently proportionately more than nine times greater here compared to the UK. Tesco Ireland said it was “unable to comment further” on the matter.
The news has once again put the spotlight on the grocery sector draft regulations that Jobs and Enterprise Minister Richard Bruton has yet to approve.