THE Co-operative Group's annual results for the year ended January 12th show profits down from £ 361 million to £ 249.6 million, mainly as a result of one-off costs associated with last year's merger with United Co-operatives and restructuring costs in the Group's financial services arm, CFS.
However the overall picture is bright with the Trading Group reporting an operating profit of £ 322.7m before significant items – an increase of 35.2 per cent on the previous year.
Chief Executive Peter Marks commented: "The results show that, despite all the changes going on in the business, we have continued to make huge strides within the Trading Group.
"The Co-operative Group now has the critical mass necessary to deliver real change. With the successful integration behind us, we can embark on our three-year plan to invest £ 1.5 billion to transform our retail estate under a single unified brand and build our market share."
A statement from the Group said Trading Group sales were up 18.8 per cent to £ 6.3bn, thanks to a particularly strong performance from the food business.
In food, a strong trading performance combined with new product launches and further store refits delivered excellent results, said the Group. Like-for-like sales were 4.6 per cent higher and profit before significant items was up 50.5 per cent to £ 139.2m.
Pharmacy and funerals both delivered strong sales and profit growth. Pharmacy sales were up 58.1 per cent at £ 541m and operating profit before significant items up 9.6 per cent at £ 30.8m. Funeralcare sales increased by 19 per cent to £ 234m and operating profit before significant items was up 66 per cent at £ 31.5m
The statement says overall Group financial performance – the Trading Group and CFS – was affected by significant exceptional costs relating mainly to the integration of the Group and United and internal reorganisation in the CFS insurance business.
However dividend payments to customer members rose from £ 22m to £ 45m.
Financial and Operational Performance:
o Group sales net of VAT rose 13.4 per cent to £ 8.3bn (£ 7.3bn) or £ 9.1bn gross (£ 7.9bn)
o Consolidated Group operating profit before significant items rose 8.6 per cent to £ 431.6m (£ 397.4m)
o Profit before payments to and on behalf of members fell to £ 195.5m (£ 359.1m) due to significant exceptional costs.
o Members' funds rose 16.1 per cent to £ 3.8bn (£ 3.2bn)
o More than 800 retail outlets were converted to the new brand concept as part of a £ 200m investment in 2008
o Net debt rose from £ 155m to £ 563m reflecting the impact of the merger and significant investment in acquisitions and refits
(The results represent a full year of the Co-operative Group and six months for United Co-operatives).
*Further coverage in the next edition of Co-op News.