Co-op Group Sees Weaker Annual Profits

The Co-operative Group has warned that costs associated with its Rebuild programme and pension scheme will hit full-year profits.

The food-to-funerals mutual, which is battling to restore its fortunes following the costly near-collapse of the Co-op Bank in 2013, said it had returned to half-year profitability in the six months to 4 July.

But it said that its full-year results would feel the impact of rising corporate costs - up 11% over the first 26 weeks of its financial year to £73m.

The Co-op said Rebuild was "on track" as half-year statutory profit before tax came in at £36m following a loss of £9m in the same period of 2014.

Underlying profits, which better reflect day-to-day trading and strip out costs, were also back in the black at £64m.

A £1m loss was announced 12-months ago.

Its food business grew like-for-like sales by 0.8% in the period, despite the bitter supermarket price war that has seen shoppers march towards heavy discounters.

The Co-op said investment in its convenience offering was paying off, with 35 new stores opening during the six-months and a total of 116 stores were refurbished, resulting in a 6% rise in sales.

Its Funeralcare division had the busiest start to a year since 2008, Co-op said, with business volumes increasing by nearly 12%.

Ten new funeral homes were opened during the period, taking the total estate to 970 homes.

Its insurance arm also returned to profit.

Chief executive Richard Pennycook 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.

"Our colleagues share a great belief in The Co-operative, and what we stand for.

"They are at the forefront of our Rebuild efforts as we focus on our purpose of ‘Championing a better way of doing business for you and your community’."