The Co-op Group published its annual report today (5 April), which shows the business maintained its underlying profitability while reducing debt.
Continued economic turmoil contributed to an 11% fall in profits for the year to 31 December at the retailer’s grocery business but the Group said underlying operating profit across its whole business held steady at £100m. The society said “early and targeted action against tough economic backdrop” resulted in a “strong operational performance and robust financial returns”.
The Group’s board says it “remains confident in the strategy” but warns “the volatile external environment and turbulent economic headwinds, including inflationary pressures to continue”. However, CEO Shirine Khoury-Haq told reporters after the results were released that there no more plans for redundancies – after 400 jobs and 400 vacant posts were made redundant last year.
And the Group is also pushing to grow its membership by a million over the next five years.
Pre-tax profits rose to £247m from £57m a year before, buoyed by a one-off £319m profit from the sale of the petrol forecourt business to Asda, which completed in October.
The Group reported a revenue of £11.5bn, up £0.3bn on the previous year. But the loss of business from the petrol forecourts has knocked £150m off revenue and £10m from underlying profit. Excluding this factor, on a like-for-like basis profit increased by £10m from £90m in 2021 to £100m in 2022.
Meanwhile, underlying operating profit remained steady at £100m, the same as in 2021. Group net debt fell by £587m to £333m (2021: £920m).
In the food division, revenue rose £134m to £7.81bn (2021: 7.67bn), while wholesale revenue rose £53m to £1.44bn (2021: £1.39bn).
The number of transactions a week also increased by 5% to 16.4m. The Group also continued expanding its online offer, through its website, and partners and revenues were up 24% to £222m (2021: £179m).
The Group is also supplying Co-op branded products to Nisa, whose sales of Co-op branded products grew by 12.5% in 2022 to £199m (2021: £176.6m) and now represents 20% of total sales.
In the funeral division overall revenue increased by £7m to £271m (2021: £264m) while the growth in share of the market for funerals, more than offset the lower death rate, with 93,867 funerals carried out (2021: 90,731).
Meanwhile, the overall income was down to £24m (2021: £34m) in the insurance division, which the Group attributes to a decline in new car sales and advent of new product and pricing regulation.
The legal division increased overall revenue by 19% to £46.3m (2021: £39.0m).
Khoury-Haq added: “It’s clear that our early action to significantly reduce our debt, improve our cash position, and tighten cost controls, has made a significant difference to the financial strength of our Co-op and has enabled us to look forward with confidence, despite continuing market uncertainty.
“We now have an even better foundation upon which to grow our businesses. We’re also looking to grow our membership, putting membership at the heart of our Co-op, with ambitious plans to both attract new members, and deepen relationships with our existing members.
“And we will continue to bring our vision to life to make a genuine difference for our colleagues, members, and communities through these challenging times. I’d like to thank each and every one of our amazing colleagues for all of their hard work and support over the last year.”
Allan Leighton the chair of Co-op Group, whose nine-year maximum term ends in February 2024, said: “The inflationary challenges facing most consumer-facing businesses are well known, so for our Co-op to have delivered this level of performance over the year is encouraging.
“We are, rightly, judged by our members on both the financial and social value we can create and it’s clear that we’ve delivered on both sides of this equation. The future focus on growing membership is vital for ensuring the future success of our Co-op for generations to come.
“I’d like to thank Shirine, her management team and our 57,000 colleagues for delivering this performance at a time when our members needed a strong, resilient, and differentiated Co-op to shine.”