Operating profit at Midcounties Co-op fell to £8.2m for the year to 26 January 29, down from £11m last year, after the society recorded losses at its energy and healthcare businesses.
But chief executive Phil Ponsonby said the rest of the society’s businesses had performed strongly, with increased food and travel sales, and operating profits rising to £16.5m before taking Co-op Energy’s performance into account.
In his introduction to the society’s annual report, he said: “Our healthcare business has not improved on the position from last year, prompting a strategic review.
“We are looking to put a greater emphasis on our digital online proposition and the board has agreed to test whether there is appetite in the market for the acquisition of the majority of our pharmacy branches.
“In addition, and as anticipated at the half year, losses within our energy business have worsened. A number of factors have hit the domestic supply market hard including rising wholesale costs, record switching rates, a squeeze on margins through greater price competitiveness, and the effects of the recently introduced price-cap.
“Most energy companies have seen significant reductions in profitability and many have reported losses with a number ceasing to trade during the last quarter of the year. Unfortunately, this has led to a deterioration in the society’s overall financial performance in the second half of the year given the greater impact in the winter months of the energy business.”
He added: “The underlying conditions within the energy market are unlikely to improve during 2019, so your board and management have been considering a range of options to reduce the overall impact placed on the society by the business.
“It is pleasing to report that we have recently agreed additional facilities with our lenders for £30m, indicative of the confidence they have in the forward plans for the society.”
The year saw the society recruit its 700,000th member, and engage more than 35,000 of its members in events such as its AGM, half-year meetings and fun days.
Over the year, it distributed more than £600,000 to good causes. Colleagues, members and customers donated over 100,000 items to foodbanks, and staff performed more than 38,000 volunteering hours.
Midcounties acquired the Phone Co-op through a transfer of engagements and, in its food business, spending more than £4.9m on 17 food store refurbishments. It opened eight new stores and launched three new post offices.
Its Best of our Counties range of locally sourced produce continued to grow with sales up 22% in the year to £11.2m.
The society opened three new travel branches in Ilkeston, Arnold and Burton-upon-Trent, and its childcare division rebranded eight nurseries under its new Little Pioneers name to reinforce its co-operative difference.
The gross sales of the society’s businesses are as follows:
Food and Post Offices: £594m (2017/18: £572m)
Travel: £397m (2017/18: £363m)
Energy: £423m (2017/18: £420m)
Healthcare: £29m (2017/18: £32m)
Flexible Benefits: £25m (2017/18: £26m)
Phone Co-op: £6.7m (first year trading as part of Midcounties)
Funeral: £34m (2017/18: £34m)
Childcare: £34m (2017/18: £32m)