Sales at Tesco Ireland almost reached the €2 billion mark in the year to February 28th last, the company said yesterday.

The grocery giant reported a 9.5 per cent increase in sales at its Irish business to €1.92 billion. Five new stores that it opened around the State during the year helped to drive growth in sales. Stripping out their contribution, underlying growth was 4 per cent.

The company did not reveal the profits it made in Ireland during the year. London-listed Tesco reported group pre-tax profits of £1.6 billion (€2.4 million) on sales of £33.5 billion.

That is a margin of 4.7 per cent. On that basis, Tesco Ireland could have generated pre-tax profits in the region of €90 million last year.

Its chief executive, Mr Gordon Fryett, said at a press conference that margins in the region of "5 to 6 per cent" were the general rule for retail food sales. Food accounts for around 80 per cent, or €1.6 billion, of Tesco Ireland's sales.

The company said yesterday that its Irish workforce grew by 1,500 to 11,000 over the last year. It opened two new stores in Cork, and one each in Kerry, Waterford and Meath. It also opened a new 27,000 sq ft distribution centre.

This year it plans to open seven new outlets, including what will be its flagship hyper market at a new centre at Clare Hall, Malahide Road, in Dublin. That facility will employ 350 people.

Mr Fryett also responded to a recent survey in the retail trade magazine, Shelflife, which found that Tesco Ireland is charging more for a number of products than Tesco UK.

He argued that the chain's value range, which consists of 1,200 products, was the cheapest in the State.

"It was not a true comparison, because a lot of the products that are sold in Ireland are made here in Ireland," he said. "You have to come back to the fact that the Irish economy is a high cost economy."

He also pointed out that Tesco had not raised prices during the year, and had cut some of them in response to competition from discounters Aldi and Lidl.

Mr Fryett said the chain had grown its market share during the year, with some of the previous gains made by the discounters eroded in recent months.

However, he stressed that Tesco believed both to be serious competitors focused on growing their own share.

Mr Fryett said Tesco did not have a position on the Groceries Order, which drew criticism earlier this year from the Competion Authority after Dunnes Stores and Tesco were fined for contravening it.

The two groups were fined €2,100 for selling baby food below cost, contrary to the order.