Unexpected fall in death rate contributes to lower interim profit levels for Co-op

Revenues increased at the Manchester-based Co-operative Group in the six months to July 6, although pre-tax profits declined.

The group, celebrating its 175th anniversary this year, reported revenues of £5.34bn, 12% up from £4.83bn the previous year.

However, a pre-tax profit, on a non-IFRS accounting basis, of £30m, compared with £44m in 2018.

During the six month period the group said it returned £29m to members and £6m to 4,000 local causes.

It also recorded 22 consecutive quarters of like-for-like sales growth in food – total sales were up by 3% and like-for-like sales up by 1.7%.

The group also extended online food delivery trials in London using zero emission electric cargo bikes and by partnering with Deliveroo.

Funeral revenues fell by 6%, driven by an unexpected 10% fall in the death rate and the Co-op’s conscious decision to hold prices in a changing and competitive market.

Funeralcare will concentrate on innovation, choice, flexibility and partnerships – giving the same level of focus and care to develop the business as the Co-op did with the reset of its food business five years ago.

Co-op Health is expected to be rolled out nationally by early 2020 bringing convenience to pharmacy and health services.

The group re-entered the life insurance market, launching Co-op Life Cover, including an innovative payment holiday option.

It successfully re-financed £300m of existing debt, through a Fairtrade Sustainability Bond – twice over-subscribed and a UK retailing first.

Chief executive Steve Murrells said: “We’ve enjoyed another good six months where the strength of our business has led to a further £35m of value being generated for our members and their communities.

“Our food business continues to perform strongly in a highly competitive market and has now recorded 22 consecutive quarters of like-for-like sales growth. As our largest business, it is providing the fuel for our growth in terms of member value and community impact.

“In funerals we are actively re-positioning the business to meet the changing needs of our members.

“We are the market leader, but we will also lead the market in providing better choices and options for our customers in the years ahead.

“Likewise, the development in our insurance, legal and health businesses will enable us to significantly broaden the range of Co-op services in areas where our members know the Co-op difference can be clearly seen.”

Co-op chairman, Allan Leighton, said: “We have made further progress during the first six months of this year and the strength of our business can be seen by our underlying financial position and through the increasing impact we’re having in local communities.

“The Co-op is now 175 years young, and we have worked hard to ensure that we remain relevant to all generations, and in particular younger co-operators.

“Whether this is using our presence at eight music festivals to introduce people to our values and ways of doing things, or by developing motor insurance products specifically with the needs of young drivers in mind.

“The Co-op is thriving and we are committed to growing our Co-op difference and impact for generations to come.”

Looking ahead, the group said with Brexit continuing to create uncertainty it continues to plan and prepare as best it can.

“In the event of a ‘no deal’ Brexit there is an increased risk of some disruption to our supply chain, however we will do all we can to protect our customers and members from this impact.”