Sales and profits declined for wholesaler Federated Co-op (FCL) during 2019.
Sales revenue fell 4.5 per cent to $9.17 billion from $9.6 billion while profits plunged 17.8 per cent to $959 million, according to the annual report.
The loss is explained by $59 million increased operating expenses, $20 million increased income taxes and $94 million loss on derivatives in the fiscal year ended Oct. 31, 2019.
Even though sales and profitability were down “this past year saw us achieve our second highest levels of earnings ever,’’ CEO Scott Banda said in his report.
“We continue to experience very competitive conditions for our local co-ops. Competitors are larger and more aggressive in tougher times.’’
The competition led to a decision to redistribute more of FCL earnings to member co-ops in 2020.
The “most disappointing news of 2019 was the Calgary Co-op’s decision to move the food business to a competitor.
“…the damage done to local Co-ops stemming from Calgary Co-op’s decision will be felt for some time.’’
The decision caused closure of FCLs Calgary distribution centre and lay-offs of 200 employees.
The Calgary Co-op, which pulled out in March, has $1.3 billion sales a year.
The regulatory environment was unsettled for the Regina refinery but market share was solid.
FCL invested $237 million in refinery upgrades including $140 million to build a 15-storey tower and scrubber to remove sulphur from product and meet high octane standards.
The year also saw FCL enter the ethanol business with the $26 million acquisition of Terra Grain Fuels at Belle Plaine which employs 45. The plant cost $150 million to build in 2008.
The year ended with 170 affiliated co-op members. Ten co-ops amalgamated with others or dissolved. They included dissolution of the Dilke Co-op near Moose Jaw.
FCL has allocated members with nearly $2.6 billion patronage dividends in the last five years.
Cash allocations in 2019 amounted to $205 million in Saskatchewan, $205 million in Alberta, $148 million in Manitoba, and $90 million in British Colombia.
Ron Walter can be reached at [email protected]
