Co-op Group’s £231m profit

THE Co-operative Group has announced a consolidated operating profit before exceptional items of &#163 231.4 million on a turnover of &#163 7.8 billion ? up &#163 2.4 billion...

THE Co-operative Group has announced a consolidated operating profit before exceptional items of &#163 231.4 million on a turnover of &#163 7.8 billion ? up &#163 2.4 billion from 2001.
Results for the year ended January 11 make it clear that, as the results of the Group&#039s insurance business, CIS, were not consolidated in 2001, Group income on a like-for-like basis was &#163 529 million higher, up 7.3 per cent and profits (before exceptional items) rose by 24 per cent.
Profits from trading activities were &#163 81.4m, a rise of 40 per cent, and those from the Co-operative Bank and CIS of &#163 122.5 million and &#163 27.5 million respectively.
The Group&#039s food retailing business continued to outperform the national grocery market, with like-for-like sales up six per cent in convenience stores.
Total food sales rose nine per cent to &#163 2.6 billion and profits jumped 52 per cent to &#163 69.5 million. The Group says this was helped by store refits and acquisitions; margin improvements resulting from scale growth and a strong marketing campaign for the Group&#039s convenience offer and ethical values.
Last year, the Co-op Group refitted 262 stores, bringing total refits in the last three years to 835. In October, it acquired Alldays for &#163 133 million to become UK market leader in convenience retailing with over 1,700 outlets.
"Alldays gave us critical mass in a sector where we perform strongly. We do not intend that to be our last major acquisition in food retailing, though we are prepared to wait for the right opportunity to come along," said Chief Executive Martin Beaumont (above).
Other profit contributions came from the Group&#039s property business, up &#163 2.1 million to &#163 13.1 million. National Co-operative Chemists also did well, with profits of &#163 9.8 million, up &#163 3.9 million.
In contrast, Associated Co-operative Creameries (ACC) and the Group&#039s farming operation, Farmcare, were once again hit by the problems besetting their industries. ACC made a loss of &#163 0.2 million after &#163 0.7 million of rationalisations, while Farmcare reduced its losses by &#163 0.9 million to &#163 2.0 million.
The Group&#039s funeral business stabilised its market share at 14.4 per cent, though profits were down by &#163 3.1 million to &#163 12.7 million due to the falling death rate.
Travelcare increased sales by 6.2 per cent to &#163 401.5 million despite difficult trading conditions and reduced losses to &#163 0.4 million, down from &#163 3.7 million in 2001.
In financial services, 2002 saw the formation of Co-operative Financial Services (CFS) under the leadership of Mervyn Pedelty.
"Bringing the bank and CIS together into Co-operative Financial Services offers great potential for growth," said Mr Beaumont.
"There is surprisingly limited overlap between their customer bases, creating opportunities for cross-selling," he added.
Despite the current global situation affecting the insurance industry, CIS&#039s net premium earned was stable at &#163 1,949 million, a rise of three per cent on 2001. Pre-tax profit from general insurance rose to &#163 27.5 million from &#163 13.8 million last year.
Across its family of businesses the Co-operative Group invested &#163 359 million in 2002, while borrowings increased by &#163 108 million to &#163 368 million (due to the Alldays acquisition). Gearing remained low at 14.1 per cent.
Members&#039 funds stand at &#163 2.5 billion after distributions of almost &#163 20 million, including corporate members&#039 dividends of &#163 14.9 million.
The Group also returned 5.4 per cent of its profits to charitable and community causes, and paid out a record &#163 27 million in Dividend payments.

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