Co-op back in black and reinvesting

THE Co-operative Group has announced stable revenues and a return to profit in its half year results but warned that increased investment and capital costs in the second half of the year will have an impact on full year profitability.

Turnover stood at £4.6bn (2014: £4.7bn), with underlying pre-tax profits of £64m (2014: £1m loss)  and statutory pre-tax profits of £36m (2014: £9m loss) for the 26 weeks to July 4, 2015.

The group’s core food convenience business saw like-for-like sales increase 3.3% and it opened 35 new convenience stores during the period.

Funeral volumes increased by 12%, driven by what is said was the busiest start to a year since 2008, with a higher than usual number of deaths. It also opened 10 new funeral homes.

Meanwhile, general insurance revenues reduced in line with expectations, it said.

Net debt has been reduced to £600m (£1.4bn this time last year) ahead of increased capital investment planned for the second half of the year – the target is to keep that figure below £900m.

But the group has warned that increasing levels of investment in the second half of 2015 – it will open another 60 new convenience stores and complete a further 150 store refurbishments – will result in lower profitability and increased debt.

It added that in its full-year results there will also be an absence of one-off disposal profits, as experienced in 2014. It does not expect to declare dividends until 2018 at the earliest.

Richard Pennycook, chief executive of The Co-operative Group, said: “We’ve made a good start on the three year journey to Rebuild The Co-operative Group. These early days are about fixing the basics – putting in place new leadership teams and providing the investment to deliver the strategies for our businesses. Our customers and members are beginning to see the difference.”