The Co-operative Group’s acquisition of the Nisa convenience chain and a strong performance in food sales led to a sharp rise in first-half profits for Britain’s biggest mutual group.
The company, which operates supermarkets, funerals, legal services and insurance businesses, reported an 86% jump in pre-tax profit to £26mln in the 26 weeks to July 7.
Group sales increased 10% to £5bn, driven by growth in food sales and a contribution from Nisa.
The Co-op completed the £143mln acquisition of Nisa in early May after the convenience chain’s members and the UK’s Competition and Markets Authority gave the green light for the deal.
In its first half statement, the Co-op said it now supplies food to more than 7,700 stores after buying Nisa. By the end of the year, the Co-op expects to supply 850 of its own-brand product lines to Nisa partners.
World Cup boosts food sales
The company said its World Cup deals, such as a pizza and beer offer, boosted food sales. Total food sales increased 3% to £3.6bn.
On a like-for-like basis, food retail sales rose 4.4% and core convenience sales grew 5.1%.
Revenue in the funeral and life planning division edged up 5% to £174mln, buoyed by a higher death rate in the first quarter and a rise in probate volumes in the existing business and the recently-purchased Simplify Probate business. Underlying profit dropped 3.4% to £28mln on the back of higher investment costs.
Insurance division hit by Beast from the East
Insurance sales declined 2% to £160mln and the loss widened to £4mln from £1mln last year, reflecting tough competition in the car insurance market and the impact of the so-called ‘Beast from the East’ that brought over heavy snowfall and icy temperatures to the UK in late February and early March.
During the period, the Co-op opened 45 new food stores and 10 new funeral homes. It also invested £50mln to improve prices in food products.
“Our investment in products, price and distribution channels has seen us grow revenue, profit and member value in the first six months,” said chief executive Steve Murrels.
The company said it remains confident that it will continue to invest in the business to create increasing value for its members despite uncertainty surrounding the economic and political environment.
Net debt fell to £707mln at the end of the first half from £775mln at the end of last year. The group expects debt to remain within its guidance of around £900mln.
Co-op returns to healthcare sector
The Co-op also announced the acquisition of Dimec, a healthcare technology platform.
Murrells said the deal “allows us to accelerate the development of our healthcare proposition, and provides the digital platform required to help customers in the future conveniently access and link their healthcare needs, including interacting with their NHS GP.”