Profits up 17% at The Co-operative Group
12 October 2009
Group Financial Performance*
- Group revenues up 27.1% to £6.4bn (2008: £5bn) **
- Like-for-like food sales up by a market-beating 7.3% (ex-fuel and VAT)
- Group profit before tax up 17% to £228.8m ***
- Group operating profit (before significant items) up 32.9% to £294.4m (2008: £221.6m)
- Members’ funds up 8.1% to £4.0bn (2008: £3.7bn)
- Net debt up at £1,665m (2008: £531m) after net capital investment of £1,321m
- Net debt/EBITDA ratio of 2.3 (2008: 1.2)
- Food business delivered an excellent trading performance. We have now reported 14 consecutive quarters of like-for-like sales growth
- Integration of Somerfield business progressing well
- 29 Somerfield stores converted
- 200 stores to be converted within first year of acquisition
- 200 stores sold; £650m raised through disposal programme
- Co-operative Financial Services (CFS) underlying shareholder profit up 11% to £81.4m. Merger of CFS and Britannia complete and integration underway
- Funeralcare operating profit before significant items up at £28.1m (2008: £24.1m)
- Pharmacy delivered a creditable result with operating profit up 8.7% to £14.8m (2008: £13.6m) despite government reductions in prescription reimbursements
- Travel business continued to outperform the market, in spite of adverse trading conditions, with an operating profit of £2.5m (2008: £7.9m)
* All results are presented on a continuing basis
** For continuing operations and before premiums ceded to reinsurers
*** Group profit before payments to and on behalf of members – equivalent to profit before tax for a plc
Peter Marks, Group Chief Executive, The Co-operative Group said:
“The Co-operative Group has delivered another strong performance, across all our markets, in the face of continuing economic uncertainty and increasing competition.
“In the Trading Group, our success has again been driven by an exceptional performance from our food business, which continues to grow, both organically and as a result of our integration of Somerfield. This has enabled us to reduce prices to customers and there will be some great offers in the run up to Christmas as well as more price reductions to come as the integration benefits kick in.
“But, while our competitors have been focusing heavily on price alone we have been concentrating on the twin pillars of value and values that are essential in the convenience store sector. Value is, for us, about convenience, products, customer service and price – and values are what have distinguished co-operatives from the competition for 165 years. We have continued to gain market share as a result of our reputation as a trustworthy and ethical business.
“As an example of the success of this approach, sales of our value range, which was relaunched and extended under The Co-operative Simply Value label in March, were up almost 80% year on year, whilst Fairtrade products have also enjoyed continued growth of 35%.
“During the half year we also extended our higher-welfare Elmwood standard to all Co-operative fresh chicken and rolled out the standard to our own-brand fresh turkey at Easter. And I’m pleased to report that for this Christmas, all our own-brand fresh and frozen turkey and turkey crowns will be to this same higher-welfare standard, but at no extra cost to our customers.
“In addition, our customers are also enjoying British own-brand bacon, gammon and fresh pork after we switched our entire range to home-produced to support UK farmers and to raise animal welfare standards – all at no extra cost to customers.
“We have now substantially completed the disposal of the Somerfield/Co-operative OFT stores, as well as a number of stores which didn’t meet our trading format and this has raised in excess of £650m for 200 outlets.
At Co-operative Financial Services, success is a reflection of the prudent financial management of the business throughout the credit crunch and the strength of the Co-operative brand during this difficult economic period.
“Elsewhere within the Group there have been robust performances from our Funerals and Electricals businesses, while Travel and Pharmacy have performed well in markets that are extremely challenging.
“After a period of extensive expansion and acquisition, the second half of 2009 will mark a period of consolidation. We will continue to focus on successfully integrating the Somerfield and Britannia businesses and delivering the benefits to our customer members. During this period, we expect the economy to remain challenging with continued increases in unemployment and no immediate signs of a recovery in consumer spending.
“In spite of our recent success it would be naive to think that we are immune to the recession. That said we are pleased with our half-year performance, the second half has started well and we look ahead to the future with renewed confidence.”
More information can be found in the Interim Report 2009 (PDF 1 MB) – Once you've clicked on the link, select save and follow the instructions.
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