The Co-op has reported a small increase in its full-year revenue, but warned that ongoing inflation and volatility will dampen profitability in the immediate term.

For the 52 weeks to December 31, 2022, the c-store specialist reported a £300m increase in revenues to £11.5bn, while underlying EBITDA dropped £15m to £490m.

Underlying operating profit for the period was unchanged at £100m, while group profit before tax was £247m, up by £190m.

In terms of cash flow, the retailer bought net debt down to £333m, from £920m in 2021 – a £587m reduction and “a significant shift” for the business.

The Co-op said despite the challenging market, it had achieved this while investing a further £37m in the fourth quarter in price, £100m in additional energy costs and salary inflation, and had dealt with the loss of £150m in sales and £10m in underlying profit from the sale of petrol forecourts.

The Co-op said the sale of the forecourts to Asda, should the deal be waved through by the CMA, will generate net proceeds of £408m and reduce lease commitments by £171m.

The c-store specialist said that to support staff during the cost-of-living crisis, it had made a £55m overall investment year on year into staff pay, invested £12m in colleague membership card payments and extended the staff discount to 30% across own-brand products.

In terms of outlook, the Co-op board said it “remains confident” in its strategy, but expects “the volatile external environment and turbulent economic headwinds, including inflationary pressures, to continue.”

Co-op chief executive Shirine Khoury-Haq 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.

“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.

“And we will continue to bring our vision to life to make a genuine difference for our colleagues, members and communities through these challenging times.

“I’d like to thank each and every one of our amazing colleagues for all of their hard work and support over the last year.”

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