FCL shows lower earnings

Federated Co-operative Ltd. wants to get back to the top of the podium.

“We’ve had some gold medal performances,” chief executive officer Dennis Banda said in an interview during FCL’s annual meeting this week.

“We had a silver last year, but we want to be back for gold again.”

After years of record-setting financial results, the organization saw its net earnings decline by 35 percent in the fiscal year ending Oct. 31, 2009, to $491.6 million from a record $755.5 million the previous year.

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Sales were down by 22 percent to $6.54 billion from a record $8.4 billion in 2008.

Banda said while the numbers are lower, FCL actually had a solid year in 2009, with its fourth best financial result ever.

He said 2008 was an anomaly, with high fuel prices driving sales and earnings to record levels, despite the general economic downturn.

“This last year (2009) was a much more normal year,” he said.

FCL paid patronage allocation of $341.4 million to its member co-ops, down from $523.5 million a year ago.

It ended the year with retained savings of $1.6 billion, representing revenue collected over the years to finance special projects, such as the current expansion of FCL’s Regina petroleum refinery.

“It’s safe to say that over the next couple of years you will see our retail savings decrease,” he said, as that project is completed.

FCL president Glen Tully said he’s not concerned by the decline in last year’s earnings.

“Every once in a while a dose of reality is a good thing because it has allowed us to focus in on exactly what we want and what benefits we want to provide our membership,” he said in an interview.

Speaking to delegates earlier, he said it’s always a good idea to occasionally go back to the basics.

He said things have changed from the time when a close bond of loyalty existed between the member and the local co-op.

“Over the years we have lost some of that support because our membership views the co-operative as just another business that provides goods and services,” he said.

“We need to get back to basics and teach ourselves and our customers why co-operatives are important to the economy and why they need to support their local co-op.”

Banda said he expects to see FCL continue to grow over the next decade.

“We are in an enviable position by any objective standard,” he said.

“We have first class, modern and efficient physical assets all across our system, our balance sheet is strong and we have great people.”

FCL provides central wholesaling, manufacturing and administrative services to 264 locally owned retail co-ops in more than 500 communities across Western Canada. Those co-ops are owned by more than 1.3 million active members.