Co-op blames economy as profits take huge dive
The Co-operative Group has blamed an "unrelenting consumer downturn" for the mutual society's half-year profits tumbling by more 50 per cent.
Peter Marks, chief executive of the Co-op, who steps down in May, said the results, which show a weak performance at its banking and grocery businesses, have to be set in the context of the "dire economy".
He added: "A year ago I warned that we were operating in the worst conditions I have seen in more than 40 years in business. Has it got any better? No, it has got worse."
The Co-op posted a 56 per cent slump to £69m in profits before tax and member payments, the equivalent of the pre-tax figure used by listed companies, for the six months to 30 June. Revenues were flat at £6.56bn.
There is a widely held view that if the Co-op, which operates 4,800 retail trading outlets including funeral care, pharmacy and legal services, had been listed it would probably have been forced to issue a series of profit warnings and make possible management changes over the past two years.
Co-op Bank, which recently sealed the deal to buy 632 branches from Lloyds for up to £750m, swung heavily into the red last year. It turned from pre-tax profits of £9.8m to losses of £58.6m as bad debts soared. The bank blamed "challenging economic conditions" for the rise in bad debt provisions from £46.1m to £91.9m, with particularly bad figures in its corporate loan portfolio. Mr Marks said: "We are a corporate lender to small businesses and the downside of this is that more businesses have got into trouble."
The losses were struck after another £40m charge for mis-selling payment protection insurance, down from £90m last year, and the costs of the long-running negotiations to buy the Lloyds branches of £20m.
The Co-op's food business, which has nearly 3,000 shops, posted a 16.4 per cent fall in its operating profit to £119m. Like-for-like sales dropped 1.2 per cent.
Mr Marks said the grocery market remained highly competitive with up to 40 per cent of products on promotion, adding hard-pressed consumers were "spending less on food" for the first time in his career.
However, the Co-op's specialist businesses, notably pharmacy and funeral care, performed much better and both grew profits strongly.
International Women's Day 2014: The shocking statistics that show why it is still so important
Malaysia Airlines: Search for true identity of passengers with stolen passports launched as terrorism concern grows
Singapore sting: Sky-high prices are pushing locals to the edge of affordability
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
White people become less racist just by moving to more diverse areas, study finds
Exclusive: Impact of immigrants on British workers ‘negligible’
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Teacher shows sex tape featuring herself to pupils during class by mistake
- 4 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 5 Liam Neeson turned down James Bond role because late wife Natasha Richardson said she wouldn't marry him if he took it
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...