Interim results 2010: Business review
The first half of 2010 has seen The Co-operative Group deliver a very solid performance, with strong increases in both sales and underlying profits, in spite of the tough economic conditions facing all our businesses. While at a statutory level our profitability has been impacted by a number of volatile one-off costs, on the underlying basis – which gives the most accurate picture of on-going performance – we continue to show strong growth, in spite of the fact that this first half has two weeks less trading than in the comparable period last year.
The business as a whole continues to make good progress against some challenging targets. The progress we have made is even more impressive when set against a background of a flat market, the inevitable disruption associated with the massive integration projects being undertaken by our Food and Financial Services businesses and the general lack of consumer confidence. Year-on-year, our Food business is reporting a good performance, especially in stores converted to the new Co-operative brand, and the same can be said of our Financial Services, Pharmacy, Funeral, Car dealership and Life Planning businesses.
We are making good progress with the two major integration projects – Somerfield with our Food business and Britannia with our Financial Services business – with synergy benefits being delivered in both. A year or so ago, when each integration process began, we stated that the Somerfield integration would take two years, while Britannia would take three years – so we still have some way to go. Nevertheless, we have made enormous strides. On the Somerfield integration we have already made significant progress, introducing own-brand products, overhauling systems and processes and modernising our retail logistics operation. All of which is designed to provide a better service for our customers and our members. So far as the Britannia integration is concerned, we are already seeing significant progress with new products being aligned and introduced. What is clear from the progress being made on both these massive projects is that The Co-operative Group has already been significantly strengthened by these additions – and by the end of the process will be stronger than ever and in a better position to continue to compete in our tough markets.