Co-op profits dive as firm is buffeted by soaring energy bills and rising wages
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Co-op profits plummet as grocery and funeral services company ravaged by rising utility bills and rising wages
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Profits at the Co-op collapsed as it was plagued by rising utility bills and rising wages.
In an update underlining the challenge facing UK businesses, the supermarket and funeral home company said profits fell 84 percent in the six months to 2 July to £7 million.
The decline came despite revenues holding steady at £5.6bn.
Cost crunch: Co-op, led by Shirine Khoury-Haq (pictured), said profits fell 84% in the six months to 2 July to £7million. Revenues held steady at £5.6bn
Co-op chairman Allan Leighton, former boss of Asda and former chairman of Royal Mail, said: ‘The first six months of the year have been a challenging time for us, as it is for all businesses. We know that the current testing conditions will not ease in the second half.”
The group was hit by rising utility bills and the need to pay higher wages, pushing costs up £50m compared to the same period last year.
Food industry revenues rose 1 per cent to £3.9bn, but profits fell as costs rose.
The Co-op has a 6.5 percent share of the British supermarket market, making it the seventh largest player behind Tesco, Sainsbury’s, Asda, Morrisons, Aldi and Lidl.
The market is fiercely competitive as supermarkets compete to keep prices low and win over customers from rivals.
Aldi has now overtaken Morrisons and is the fourth largest grocer in the UK.
Against this background, the Co-op says it will invest £37 million in changing its food strategy.
This includes price cuts for 120 popular private label products and a renewed focus on convenience stores.
Shirine Khoury-Haq, who was named group head this year, said: “As we face a cost of living crisis, we are committed to making the lives of our members, customers and communities fairer in these extraordinary times.” and pricing for shoppers is the first step in our strategy.’
Co-op group, which includes an insurance arm as well as funeral services and food, said it was taking “decisive” steps to cut costs and reduce its debt. It aims to save £100m this year and £150m in 2023.
Khoury-Haq said: “We have made significant progress in strengthening our balance sheet against a very challenging economic background.
“Our clear focus on developing our business while controlling costs, improving our cash position and reducing debt is paying off.”