THE Co-operative Group has announced reduced sales but increased profits for the half-year ending July 23rd.
Taking into account the impact of a CIS reinsurance premium amounting to nearly £ 973 million, the Group's income dropped to just over £ 3bn as opposed to a figure of £ 4.3bn for the same period in 2004.
The underlying operating profit – before "significant items" – was up from £ 130.7m to £ 153m and the operating profit from the key food retailing activity increased from £ 37.3m to £ 41.8m, despite a fall in sales of £ 34.1m.
Food sales fell to £ 1,808.7m, but the Group say that improved control of wastage and leakage, supported by "well managed margins" contributed to a 12.1% rise in profits of £ 4.5 m, before significant items.
However Chief Executive Martin Beaumont warns that the second half will be even tougher for the Group, particularly in food retailing which he predicts will be adversely affected by cost inflation.
Said Mr Beaumont: "During the first half of the financial year, we have continued to review and improve our businesses, although much remains to be done to deliver the full potential of the Group.
"We will build on the progress we have made to date by tackling underperformance quickly and radically."
Mr Beaumont said there had been a number of solid performances, particularly in Travelcare – where operating profits rose by 44% to £ 2.6m – and in Pharmacy (where profits increased by 7.8% to £ 8.3m) .
The Property Division had also had a good half year with operating profits before investment property growth up to £ 8m.
Elsewhere, Funeralcare achieved profits of £ 8.7m on sales of £ 101.8m; the up-for-sale Priory Motor Group saw losses of £ 1.6m while Department and Home Stores lost £ 4.4m.
A statement issued by the Group said: "Getting the business to where it needs to be will be a long and sometimes difficult process. But we have achieved a lot in a short space of time and there are encouraging signs in a number of key areas. The Group is responding well to the challenges we face."
*See the next issue of Co-op News for further details of the interim results.