COVID-19 – we cannot ignore it VII – Tesco

Let’s move to the industries that might profit from the pandemic. We cannot know for sure of course, but entertainment, information technology and grocery-stores are candidates for the positive impact part of this series. It’s easy to say that we are leaving the doom and gloom behind, but let’s not forget that both Munich Re and BP were still doing rather well and showed a green roof (positive cash-flow from operations) in 2020. BP was left out because it is too large, but Munich Re is left out because of its huge liabilities (quite normal for a financial institution) as this affected the overall 3D-graph too much (stretching it out from front to back). Bombardier with its negative equity is still shown as a set of hollow boxes and Qantas and Wyndham will also stay, showing their red roofs for 2020.

Photo by Simone Hutsch on Unsplash

How is Tesco doing? It’s a British company, so the amounts in GBP had to be converted to USD. This was done with the help of xe. It turned out that Tesco has a very special broken book-year. This must be some British tradition as the year 2020 starts at the first of March, but the mid-year ends after 26 weeks creating dates like 29th of August 2019 and 24th of August 2020. We will ignore this and present the semi-annual amounts as if they were in the same periods as the others.

And now for the big question: did they do well? Looking at the graph we can see rather tall buildings (high revenue compared to equity (width) and total liabilities (depth) and the roofs are green. The revenue for H1 2020 is lower than for H2 2019, but very similar to H1 2019. Supermarkets usually have a higher turnover at the end of the year so this will bias the graph. The upside is that we don’t see a collapse in H1 2020 when compared to H1 2019 and the thickness of the related roofs is similar. Actually it’s slightly thicker in 2020, but there is also some financial juggling going on so we cannot be sure without a thorough investigation. I leave that to you as I don’t have time for it. Of course you can create you own 3D-graph using (and probably improving) the input-file for this post in combination with our free 3D-graph generator (even no email-address required, just a download).3D-graph showing Tesco semi-annual results

However, looking in more detail from the top, the equity went slightly down and the liabilities went up a little bit – even in comparison with H1 2019.

Top-view of 3D-graph Tesco results

In the end it looks like Tesco has been resilient, without really profiting from the pandemic. In the end the half year report H1 2020 tells what has been going on:

Cash profitability

  • Response to COVID-19 leading to £(533)m 1H UK costs as we prioritise customer and colleague safety
  • Retail operating profit before exceptional items and amortisation of acquired intangibles4 of £1,192m, +4.4%, margin 4.2%; – UK & ROI volume and business rates relief offset COVID-19 costs; CE held back by COVID-19 costs and new Hungarian tax – UK & ROI £1,133m, +6.4%, margin 4.3%

– Central Europe £59m, (23.4)%, margin 3.0%

  • Bank operating loss before exceptional items £(155)m driven by provision for potential bad debts and reduced income; continue to expect operating loss of £(175)m-£(200)m this year; capital ratios and liquidity remain strong
  • Retail EBITDA8 £1,994m, +4.1% higher YoY

Retail and bank-part respond differently, but in the end the Retail profited, despite the additional costs for safety measures.

That was it for the first post about the financial upside of Corona. Next time we will have a look at information technology and then (home) entertainment. Don’t forget to download your free copy of AnRep3D at our website Short tutorials, explaining different parts of AnRep3D are available at our Youtube-channel The white-paper and inspirational graphs can be downloaded at the homepage of our website. Follow @AnRep3D on Twitter, to be informed about new posts.

Photo by Matheus Henrin from Pexels

 

About AnRep3D

AnRep3D is the new company, founded after the handover of Scientassist (together with VRBI) to one of my sons. From now I will focus on three-dimensional graphs for the financial markets, showing the main figures from annual reports in comparison. As per 2021 a second product is available: EnRep3D. It is meant to visualise energy. Although the engine is the same, the texts, manual, website and examples (including blogposts) are focused at energy.
This entry was posted in Visualising Financial Information and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.