The £600 million sale of its petrol forecourt business to the billionaire Issa brothers and cutting hundreds of jobs has helped boost profits at The Co-op.

The Manchester-headquartered group has hailed a “strong operational performance” over the past year and said it benefited from “early and targeted action” against the tough economic backdrop, which included a shake-up which cut about 400 jobs last summer.

The Co-op has reported a jump in its pre-tax profits to £247m for 2022, £190m higher than the previous year, and said it would have fallen to a loss but received £319m of profit from the sale of its 132 petrol forecourts to rival Asda. 

Revenue also increased from £11.2bn to £11.5bn while its group net debt was cut from £920m to £333m.

The Co-op said that “despite very challenging markets” it delivered a “strong sales performance and maintained underlying profitability”. However it warned that it expects “inflationary pressure to continue” and affect profitability.

Chairman Allan Leighton said: “The inflationary challenges facing most consumer-facing businesses are well known, so for our Co-op to have delivered this level of performance over the year is encouraging.

We are, rightly, judged by our members on both the financial and social value we can create and it’s clear that we’ve delivered on both sides of this equation. The future focus on growing membership is vital for ensuring the future success of our Co-op for generations to come.

I’d like to thank Shirine, her management team and our 57,000 colleagues for delivering this performance at a time when our members needed a strong, resilient, and differentiated Co-op to shine.”

On its outlook, The Co-op said it remains “confident in the strategy, as we drive growth through our core businesses via physical and digital routes to market, ambitiously grow our membership, whilst maintaining financial discipline and deliver upon our vision of co-operating for a fairer world”.

It added that it expects the “volatile external environment and turbulent economic headwinds, including inflationary pressures to continue” but that the “early action taken last year to strengthen the Co-op’s financial position, leaves our Co-op well placed to face into, whilst not being immune from, such headwinds”.

Chief executive Shirine Khoury-Haq commented: “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.”

She added:”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.”

Food revenue increased by £134m to £7.81bn while wholesale revenue increased by £53m to £1.44bn. In funeralcare, overall revenue rose by £7m to £271m but income fell by £24m in the group’s insurance division. However, revenue increased by 19% to £46.3m in its legal arm.