Published: Fri, April 06, 2018
Business | By Tara Barton

Co-op profits rise as membership increases by 1.2 million

Co-op profits rise as membership increases by 1.2 million

The Co-operative Group has returned to profit after what it called a "year of progress".

The 2016 loss reflected a £185mln hit after the group slashed the value of its 20% holding in the Co-op Bank to 1% as a black hole in the lender's balance sheet forced it to seek outside investment.

Underlying pretax profit - a key profit measure for Co-Op, was up 25% at GBP65 million compared with GBP52 million in 2016.

In its outlook, the company said its food, insurance and funeral and life planning markets remain "highly competitive against a challenging market". Food core convenience like-for-like sales were both up (3.4% and 4.3% respectively), with wholesale sales to independent societies up 7% to £1.7bn. The group's funeral business saw a 4 per cent rise in revenue.

Revenues in the insurance division dropped 24% due to a new reinsurance contract but gross written premiums rose 3% and like-for-like net earned premiums increased 8%.

Steve Murrells, chief executive of the Co-op, said its current success showed how the Co-op's different ownership model and approach to business, "based on returning profits to our members and their communities" - was resonating with shoppers, after a year in which membership numbers grew by 15% to 4.6m.

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"It is vital that our Co-op continues to innovate and be relevant to meet the changing needs of our stakeholders". "That is why we are launching the Stronger Co-op, Stronger Communities plan".

"We're delighted with our performance, but we're hungry for more and ready to create the Co-op of the future".

As part of the retailer's planned convenience expansion, the Co-op recruited 200 "member pioneers" created to improve community engagement near Co-op stores through supporting local causes.

In funeral, the Co-op said it will continue to hold funeral prices and invest in products and services.

If the Co-op's plans continue as expected, by the end of 2018 it will supply one in six convenience stores in the United Kingdom, more than treble its current market share. A second rescue deal previous year saw the Co-op shed the last of its holding.

The Co-op has also bought Nisa Retail for up to £137.5m in a deal that's yet to be approved by regulators, while the group will also supply Costcutter Supermarkets Group as exclusive wholesaler. Probate is the legal process for proving the validity of a will of a deceased person.

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