Top story
The Co-op Group has this morning announced a 10% rise in first half sales to £5bn driven by strong like for like food sales growth and its acquisition of Nisa.
Food retail like-for-like sales were up 4.4% in the first six months of the year, meaning The Co-op has now posted 18 consecutive quarters of like-for-like sales growth.
Core convenience like-for-like sales were up by 5.1% in the period, while it reported wholesale sales of £269m following the Nisa acquisition.
The Co-op now supplies food to over 7,700 stores and by the end of 2018 the group will supply 850 Co-op own-brand product lines to its Nisa partners.
Total Food sales were up 3% to £3.6bn, reflecting strong sales growth driven by a market leading offer for the World Cup with underlying food operating profit up 23% at £80m.
Group profit before tax increased from £14m to £26m and group underlying profit before tax more than trebled to £10m from £3m in the same period last year – this after £35m of reward was generated for Co-op members.
Despite the increased profits, Co-op said it was investing in price and innovating to stay competitive.
£50m invested to improve prices in food across 100s of everyday products in the period. Industry CO2 shortages failed to impact beer, WINE and spirit sales, which were up 4.8% with a bottle of champagne sold every minute.
Co-op said its stellar summer performance was also boosted by its World Cup “Pizza & Beer” deal, with over 180 pizzas sold for every minute of football played
In other parts of the group, funeral and life planning revenues were up 5% to £174m and insurance sales fell 2% to £160m.
The group has also announced the acquisition of healthcare technology start-up Dimec, which enables patients and their GPs to interact and better manage their prescription needs, via a newly established Co-op Ventures arm.
Steve Murrells, Co-op chief exec commented: “We’re moving forward at pace with our Stronger Co-op, Stronger Communities plan, which we set out at the beginning of the year. We know that in order to make a difference, we have to be commercially successful and our performance in the first half shows that we’re delivering on that ambition. Our investment in products, price and distribution channels has seen us grow revenue, profit and member value in the first six months.
Co-op chairman Allan Leighton added: “Against a backdrop of increasing national uncertainty, I’m pleased that the Co-op has continued to perform successfully during the first half of the year. It is in these times of volatility that our way of doing business, which gives back to our members and the communities we operate in, becomes even more important. These results show that we are growing our business and increasing the positive impact we can have on our members and the causes they care about in their communities.
“We’ve got exciting plans to continue transforming our Co-op to make it even more competitive, relevant and innovative in both existing and new markets. We’ll continue to grow our current businesses and through our Ventures team we’ll move into new areas where we can deliver even more value for our members and their communities.”
Morning update
This week’s edition of The Grocer features a look at how suppliers are stockpiling goods to mitigate a possible ‘no deal’ Brexit scenario.
Nestle UK’s sales edged up last year driven by Nespresso growth, but its UK earnings dropped amid weaker pet food performance. Plus, Innocent Drinks posted 22% growth driven by rapid international expansion.
Go to thegrocer.co.uk/finance later this morning to read the full details.
On the markets this morning, Connect Group, the logistics company spun out of WH Smith, has announced a profit warning noting that full year results will be below expectations.
In a trading update for the final quarter of the year to 31 August 2018, Connect Group said Smiths News continues to demonstrate its resilience as newspapers sales have held up to management forecasts, though magazine sales weakened in the final quarter and the World Cup delivered lower sales of stickers and albums than in previous tournaments.
However, conditions in the parcel freight market have continued to be challenging, with actions to improve service and efficiency having had limited time to influence financial performance in the period. As a consequence, Tuffnells’ second half performance is expected to be worse than H1 2018.
The group’s plan to close Pass My Parcel announced in June 2018 has proceeded at pace and an agreement has been reached with key clients to wind down operations and exit onerous contracts.
The swifter than anticipated exit from onerous contracts has led to additional operating losses in the period but is expected to have a positive impact on the level of provision required for closure costs in its 2019 financial year.
On 11 September 2018, Tuffnells was also fined £1.5m in relation to a fatality at its Brierley Hill depot that occurred in January 2016.
The group stated: “Trading in the period has seen a continuation of the challenging trends experienced throughout the year; as a result, the group expects its full year trading performance to be below expectations.”
The FTSE 100 has opened the day up 0.4% back to 7,311.7pts.
Connect Group shares are down 8.2% on 34p on this morning’s profits warning.
Other movers include Greencore (GNC), up 2.3% to 198.7p, Greggs (GRG), up 1.2% to 1,077p and Imperial Brands (IMB), up 1.2% to 2,655p.
Fallers include PureCircle (PURE), down 1.5% to 305.5p, Premier Foods (PFD), down 1.4% to 42.8p and Morrisons (MRW), down 0.9% to 258p.
Yesterday in the City
Morrisons (MRW) posted its best sales quarter for nine years and announced a special dividend gift to investors, but the hard to please City still sent the supermarket’s shares into the red despite the stellar results.
On Thursday morning the Bradford-based supermarket announced its first half sales were up a better than expected 4.5% in the six months to 5 August – representing like for like growth (excluding fuel) of 4.9%.
However, the shares ended the day down 2.1% to 260.25p after exceptional items took off a bigger chunk than expected out of Morrisons’ bottom line as reported profit before tax dropped 29% to £142m. Also there were City concerns that the second quarter – with the World Cup and hot weather – gave only a one-off boost to Morrisons sales.
The FTSE 100 ended the day down 0.4% to 7,281.6pts as other consumer stocks continued to suffer.
The tobacco giants were back in the red yesterday, with Imperial Brands (IMB), down 2.5% to 2,624p and British American Tobacco (BATS) down 1.9% to 3,691.5p.
Other fallers included Tate & Lyle (TATE), down 4.4% to 638.2p, SSP Group (SSPG), down 2.1% to 689.7p, Marks & Spencer (MKS), down 2.1% to 287.2p, Just Eat (JE), down 2% to 704.4p, McColl’s (MCLS), down 2.2% to 152.5p and Hilton Food Group (HFG), down 2.3% to 982p.
The few stocks on the rise included Premier Foods (PFD), up 2.2% to 43.4p, Stock Spirits (STCK), up 1.6% to 195p, Coca-Cola HBC (CCH), up 1.3% to 2,598p and Greencore (GNC), up 1.3% to 194.3p.
No comments yet