Co-op hails record results

The Co-operative Group hailed record annual results today but warned a return to "real economic growth" could be a year away.

The mutual's revenues jumped 31 per cent to a mammoth £13.7 billion last year as its grocery arm absorbed the former Somerfield business and its Co-operative Financial Services banking business merged with the Britannia.

Chief executive Peter Marks said it had been a "historic year" but warned the waters ahead are "still choppy".

He said: "It may be that the UK does not start to see real economic growth until the end of 2010 or as late as the beginning of 2011.

"Therefore, sustaining the level of success we have enjoyed over the last two years will not be easy."

Profits before payments to members - equivalent to pre-tax profits at a plc - jumped 85 per cent to £402 million over the year.

Mr Marks said the Co-operative's food and financial services businesses would enjoy the benefits of greater scale over 2010 as the mutual steers through a fragile recovery in the economy.

The Co-operative's grocery arm - the UK's fifth biggest food retailer with 3,000 stores and 21 million customers every week - grew like-for-like sales 5.5 per cent in 2009 and has now seen 16 successive quarters of sales growth.

The Somerfield addition saw food revenues surge by £3 billion to £7.5 billion, while the mutual has seen a 12 per cent sales uplift from the stores in its estate which have been rebranded or modernised.

Operating profits at the financial arm, which owns brands such as online bank Smile, rose 21 per cent to £177 million as the group benefited from its merger with the Britannia to create a "super-mutual".

The deal helped push up customer deposits to £32.5 billion during the year, although customers were also drawn to the more stable mutual model after the crisis which hit several mainstream shareholder-owned banks.

Other businesses in the group fared less well, with revenues sliding at its travel business due to recession and its motor dealership posting a loss.

But the relative success of mutuals during the recession has attracted the attention of political parties, with the Conservatives considering an employee-led co-operative model as a potential vehicle for public services reform.

Mr Marks said it was "no coincidence that our business model is in vogue", but added: "Without the right leaders, managers and staff to drive change, and create first-class businesses, the benefits of co-operative ownership will be lost."