Co-op Group makes decent progress despite headwinds
By Josh White
Date: Wednesday 05 Apr 2023
(Sharecast News) - The Co-operative Group reported progress against its strategic targets in its 2022 results on Wednesday, despite a challenging economic climate.
It said "early and targeted actions" helped it to perform well operationally and deliver robust returns during the 12 months ended 31 December.
The consumer cooperative reported revenue of £11.5bn, up £0.3bn from the previous year, while it maintained underlying operating profit of £100m.
It said it had focussed on cash flow, which resulted in strong cash generation and a significant reduction in net debt.
Net cash from operating activities increased to £455m, up by £277m from the previous year, while its net debt improved by £587m to £333m.
Despite the volatile external environment and turbulent economic headwinds, including inflationary pressures, the cooperative said it remained confident in its strategy.
Co-op was aiming to drive growth through its core businesses through physical and digital routes-to-market, grow its membership, maintain financial discipline, and deliver on its vision of co-operating for a fairer world.
The organisation also set a new target to attract one million active new members over the next five years.
To achieve that, the Co-op said it would roll out an improved membership proposition in the first half, adding that the strength of its strategy was reflected in the recent amendment and extension of its revolving credit facility to March 2026.
The firm had also started early repayments of its 2024 bond maturity, with £100m repaid in February.
"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," said chair Allan Leighton.
"We are, rightly, judged by our members on both the financial and social value we can create and it's clear that we've delivered on both sides of this equation.
"The future focus on growing membership is vital for ensuring the future success of our Co-op for generations to come."
The Co-op said it expected turbulent economic headwinds to continue, which could dampen profitability in the short term.
However, it said it was looking forward with confidence in driving strong performances across its business areas over the longer term.
As a member-owned cooperative, it said it could prioritise and channel support for colleagues, members, and communities during the current cost-of-living crisis.
Co-op's chair Allan Leighton and senior independent director Chris Kelly were set to step down within the next 12 months.
Delivery against the company's strategy would run in parallel with a clear succession plan in place for both positions, the cooperative said.
"It's clear that our early action to significantly reduce our debt, improve our cash position, and tighten cost controls, has made a significant difference to the financial strength of our Co-op and has enabled us to look forward with confidence, despite continuing market uncertainty," said chief executive officer Shirine Khoury-Haq.
"We now have an even better foundation upon which to grow our businesses.
"We're also looking to grow our membership, putting membership at the heart of our Co-op, with ambitious plans to both attract new members, and deepen relationships with our existing members."
Reporting by Josh White for Sharecast.com.
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