Record results from a rejuvenated Co-operative Group
Preliminary Results for The Co-operative Group for the 52 weeks ended 10 January, 2009
The Co-operative Group is the UK’s largest mutual retailer. It is the fifth largest food retailer, the third largest retail pharmacy chain, the number one provider of funeral services and the largest independent travel business. It also has strong market positions in banking and insurance. The Group employs 110,000 people, has 3 million members and around 4,900 retail outlets.
As well as delivering on its financial and operational goals, The Co-operative Group aims to deliver on its social goals, playing an active part supporting local communities and the wider world. Today the Group is reporting on both of these areas.
- Record results, with gross sales including VAT up 15 per cent, breaking through the £10bn barrier and operating profit before significant items up 11 per cent to £393m
- Acquisition of Somerfield completed, transforming our food business into a major fifth player in the UK grocery market
- Merger between Co-operative Financial Services and Britannia Building Society
- Launch of the biggest rebranding programme in UK corporate history
- Food business turned in a strong trading performance. We have now reported 13 consecutive quarters of like-for-like sales growth
- Market-beating sales increases driven by successful store refits, product re-launches and investments in service and price
- Sales up 23.1 per cent to £4,527m
- Like-for-like sales up by a market-beating 5 per cent (ex-fuel)
- Food profit up 38.1 per cent to £219.1m.
- Underlying profit has increased significantly by £37.2m (20.4 per cent)
- First quarter ’09 like-for-like sales up by 6.5 per cent (ex-fuel), ahead of the market
- Healthcare and Funeralcare both delivered strong sales and profit growth. Pharmacy sales rose 37.5 per cent to £744m and operating profit before significant items increased by 19 per cent to £37.8m. Funeralcare sales rose 17 per cent to £274m with operating profit before significant items up 14 per cent at £39.2m
- Following a serious challenge due to the Government’s attempts to claw back profit from the Healthcare business, underlying profit there has fallen 13.7 per cent from £43.8m to £37.8m.
- Dividend payments to customer members, up from £45m to £50m
Financial and Operational Performance
- Group sales before premiums ceded to reinsurers and net of VAT rose 13.4 per cent to £9.4bn (£8.3bn) or £10.4bn gross (£9.1bn)
- Group operating profit before significant items rose 11 per cent to £393m (£355m)
- Profit before payments to and on behalf of members (the equivalent of pre-tax profits in a plc) rose 11 per cent to £218m (£196m)
- Members’ funds rose 3.6 per cent to £3.9bn (£3.8bn)
- More than 1,575 retail outlets converted to the new brand concept
- Net debt rose from £564m to £648m reflecting the investment in refitting and rebranding our stores
NB The Group’s statutory results for 2008 compare to the figures for 2007, which included 12 months of trading for The Co-operative Group and six months for the former United Co-operatives. The underlying Trading Group figures compare with full 12 months in 2007 for both businesses.
- Contributed a total of £11.5m to the community in 2008, a 10 per cent increase on the previous year and equivalent to 9.9 per cent of our pre-tax profits
- Launched our new Food Ethical Policy, endorsed by more than 100,000 members, which outlines our member-led commitment to maintain and strengthen our position as the UK’s leading responsible retailer
- New Community Plan launched with focus on three themes: young people, international development and climate change. This has included:
- Young People: Farm to Fork scheme offering visits to the Group’s own farms, providing hands-on experience for children showing how their food is grown; visits for children to our Waste Works education project. To date 15,000 children have benefitted.
- International Development: We became the first major retailer to convert all our own-brand hot beverages to Fairtrade; the first supermarket to stock Palestinian Fairtrade olive oil
- Climate Change: 150 schools now receiving green energy, 65 per cent reduction in plastic bag usage,15 per cent packaging reduction target will be met by end of ’09
- Co-operative Bank unveiled an updated Ethical Policy and made a number of new commitments on human rights, climate change and animal welfare
- Co-operative Travel became the first High Street travel agent to introduce its own Ethical Strategy
Peter Marks, Chief Executive, said:
“These are record results from a rejuvenated Co-operative Group. The last year has seen us significantly improve sales and profitability while also laying solid foundations for the reinvigoration and renaissance of the wider co-operative movement with the acquisition of Somerfield and the agreement to merge our Financial Services business with the Britannia Building Society.
“At a time when the economy is struggling and many business models are coming under intense pressure we truly believe that The Co-operative Group is coming into its own. The events of the past year have built on the successful merger in 2007 of The Co-operative Group and United Co-operatives and our continued strong trading clearly demonstrates the benefits of that merger.
“In the Trading Group, our food business has gone from strength to strength, driven by successful store refits, product re-launches and improvements to service levels and pricing. The deal to buy Somerfield will transform that business, making The Co-operative the fifth major player in the grocery market and ensuring we can offer our customers great choice and value in community stores.
“The merger of CFS and the Britannia will result in the creation of a financial ‘super mutual ’which will provide an even stronger ethical alternative to the many discredited financial institutions which have become embroiled in the credit crunch.
“While the economic outlook clearly remains difficult, we believe that The Co-operative Group is in a strong position. Our focus on financial success combined with social responsibility is more attractive than ever before and we believe 2009 is going to be another successful and exciting year for the Group.”
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