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The Co-operative Group has hailed a “robust” set of annual results as the mutual’s profits received a boost from the sale of petrol forecourts to Asda and cost-cutting.
A £319m gain from the the sale of the forecourt business in October helped the group avoid a loss for the 52 weeks to 31 December 2022.
Pre-tax profits came in at £247m for the year, compared with £57m in 2021, while underlying operating profit held steady at £100m.
Co-op also protected its bottom line with £101m of cost savings in 2022 as it battled rising inflation.
Revenues for the year nudged up by £300m to £11.5bn, with the sale of the petrol stations reducing the top line by £150m.
The food retail arm of the group reported revenues of £7.8bn, a rise of 1.8% year on year, with wholesale revenues up 3.6% to £1.4bn.
The group also reported a £587m reduction in net debt to £333m as it focused on building cashflow during the year, with cash generated from operating activities jumping from £178m in 2021 to £455m.
Despite the “strong” operational performance and “robust” financial returns, the Co-op warned of a “volatile external environment and turbulent economic headwinds”, with ongoing inflationary pressures.
Outgoing chairman Allan Leighton 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.”
CEO Shirine Khoury-Haq added: “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.
“We now have an even better foundation upon which to grow our businesses.”
Morning update
Former Co-op Group boss Steve Murrells has been appointed as the new CEO of meat processing giant Hilton Food Group.
Murrells will succeed Philip Heffer, who has decided to stand down from the board and step back from running the company after almost 30 years with Hilton Foods, including the past five years as group CEO.
Hilton said Heffer would support the new boss to ensure a smooth handover when Murrells starts in the role on 3 July.
Murrells’ connection to the business dates back almost 30 years, when he was one of Hilton Foods’ first customers and commercial partners at Tesco.
After serving as CEO of Tulip from 2009 to 2012, he was appointed as CEO of Co-op Food, where he oversaw a turnaround, before stepping up as group CEO.
Murrells was also awarded a CBE in the 2022 New Year Honours for services to the food supply chain.
Hilton chairman Robert Watson said: “Steve has an outstanding record as a leader within the food industry, and the Board is confident that his considerable experience will be of huge benefit to Hilton Foods as we take the business to the next stage.”
Murrells added: “Back in the 1990s and early 2000s, I was the meat category director at Tesco when Hilton was pioneering centrally packed meat, and the way that Philip and the team have grown the business since then has been incredible, with 15 years of sensational growth.
“I’ve loved getting to know the business again recently, and what is exciting is that there is so much still to achieve. While Philip is stepping down, he’s not stepping out of the business, and we will really benefit from his support with customer relationships and business development in his new role. I’m looking forward to working with Robert, Philip and the wider team as we take Hilton Foods to the next level and become the international food and supply chain partner of choice.”
Heffer said: “After the work we’ve done to grow Hilton Foods and expand our commercial model over the past five years, this is a good moment to step back from running the business.
“Hilton Foods today is a major international business, with sales and operations across Europe, Asia and the Pacific, offering a broad range of quality products, from meat and seafood to vegan and vegetarian products. Steve was one of our first customers in the 1990s and he has an excellent track record within the food industry.”
Separately, Hilton reported a 37.5% fall in group profits in the 52 weeks to 1 January 2023 as soaring input costs battered its fish processing business.
Pre-tax profits sank from £47.4m to £29.6m in the year as growth in sales and volumes was overshadowed by “significant” challenges in the UK seafood business.
Hilton said it experienced “unprecedented” inflation levels in the seafood division, with price recovery taking longer than expected.
The group added it had taken steps to rebuild sustainable profitability in seafood and remained confident in the opportunities the category would present for Hilton Foods over the coming years.
Revenues in the year increased 16.5% to £3.8bn, helped by contribution from newly acquired businesses and the first full year of trading in New Zealand, while volumes also rose 4.3% to 513,816 tonnes.
CEO Philip Heffer said: “After the challenges we faced last year in our seafood business, we took a series of steps to rebuild profitability and we are now well placed for the year ahead. Meanwhile we have continued to deliver on our strategic priorities and to set the business up for long-term, sustainable growth.”
He added: “Hilton Foods today is a completely different business from the company we started in 1994. Over 75% of our sales volumes are now outside the UK; we offer a wide range of protein products and categories; and we have built a technology services offer which is best-in-class in the industry. The global economy today is more uncertain than at any time in the past thirty years, but Hilton Foods is well set for long-term success.”
Shares in Hilton Food Group fell 1.3% to 686.3p as markets opened.
Elsewhere, the FTSE 100 increased 0.2% to 7,645.46pts.
Early risers included Science in Sport, up 5.9% to 11.7p, Virgin Wines UK, up 2.6% to 40p, Ocado, up 2% to 524p, and Hotel Chocolat, up 1.9% to 181.3p.
Bakkavor is down 2.7% to 100.2p, Glanbia is down 2% to €13.37 and Just Eat Takeaway is down 1.9% to 1,415p.
Yesterday in the City
The FTSE 100 fell 0.5% to 7,634.52pts after spending most of yesterday in the black.
Risers in food and drink included McBride, up 5.1% to 29p, SSP Group, up 2.1% to 251.1p, and Haleon, up 2.6% to 331p.
Just Eat Takeaway, British American Tobacco and Marks & Spencer were among the fallers, down 3.9% to 1,444p, 2.1% to 2,811.5p and 1.7% to 163.3p respectively.
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