Co-operative set to reap benefit of farm division sell-off
THE Co-operative Group yesterday continued the revitalisation of its business by lining up the sale of its agricultural division and reviewing the future of hundreds of its chemist stores.
The UK’s leading customer-owned business said as part of a wider strategic review of all of its operations it had decided that its farm network, comprising 15 farms and three packing sites, was non-core and it had started “a process that is expected to lead to a sale of the business”.
It is also exploring the options for the future of its pharmacy division, which “could include the sale in whole or part of the business”.
The unit has 750 stores in the UK employing 6,500 staff and posted a profit of £28.2million in 2012 on revenues of £764million.
It is understood that the sale of its farm network, of which 2 per cent of the food farmed ends up in Co-op supermarket stores with the vast majority being cereals sold to bread manufacturers, is at a very early stage. No timetables have been given for its disposal or when the decision on the future of the pharmacy business, which is the third largest chain in the UK, will be made.
Despite being strong businesses the divisions are said to need hefty investment with the Co-op concluding that their sale will be more useful in helping new group chief executive Euan Sutherland’s drive to slash its £1.2bilion debt mountain and revitalise its wider business following a series of setbacks at is banking arm.
This includes problems related to the takeover of Britannia building society, a failed bid to buy more than 600 branches from Lloyds and drug allegations against former chairman Paul Flowers.
It was suggested yesterday that the woes at Co-op Bank could leave the Group with annual losses of £2billion when it reports figures next month. The Co-op did not comment on the figure but Sutherland has previously warned that annual numbers would be “ugly”.
Sutherland has vowed to revive the group and restore its reputation. It recently launched a poll asking the nation to help decide how the 150-year-old organisation should modernise itself.
The Have Your Say survey allows clients, members and the wider public to comment on issues such as how it should share its profits and whether it should continue to make political donations of up to £1million a year.
