Co-op warns cost of living crisis will eat into future profits as food to funeral care firm feels pain of inflation
The Co-operative Group has warned that ongoing inflation and economic uncertainty is likely to reduce its profits in 2023.
The food, insurance and funeral care provider revealed its underlying profit remained flat at £100m for the year while EBITDA was down £15m to £490m compared to £505m in 2021.
Group revenue for the year was also reduced by £150m as the listed retailer felt the loss of the 129 petrol forecourt sites it offloaded to Asda in October – as a result revenue grew slightly by £0.3bn to £11.5bn.
However, The Co-op said that the lucrative £611m deal helped generate net proceeds of £408m, and further reduced its lease commitments by £171m.
The UK’s fifth biggest grocery store also saw food revenue up by £134m to £7.81bn compared to 7.67bn to the same period last year.
Moreover, as shoppers felt the pinch from the cost of living crisis, the number of transactions a week increased five per cent to 16.4 million.
Co-op’s insurance arm saw overall income down to £24m from £34m as the group blamed “the contracting motor insurance” with customers hesitant to splash out on new cars.
Allan Leighton, chair of the Co-operative Group, said: “The inflationary challenges facing most consumer-facing businesses are well known, so for our Co-op to have delivered this level of performance over the year is encouraging.”
He continued: “The Board accepts and understands that ongoing inflation in energy and salary levels will mean our profits are likely to reduce in 2023, as we face into another year of economic uncertainty and higher prices, while committing to invest in our colleagues and communities.”
It comes as Co-op’s board is undergoing a serious shakeup as long standing members Sir Christopher Kelly, Simon Burke, Stevie Spring, Paul Chandler and Allan Leighton all reach the maximum nine years of tenure and will be forced to step down at different points during 2023 and early 2024.
The search is currently ongoing for replacements with the group understood to have hired headhunters to snap up new recruits. .