It’s as predictable as Christmas arriving Dec. 25.
Every year at this time Federated Co-operatives Ltd. reports yet another record-setting financial performance.
This year was no exception, as the organization reported record sales of $8.4 billion and record earnings of $755.5 million for the fiscal year ended Oct. 31, 2008.
But that streak could be in jeopardy in light of the recession battering the economy in Canada and abroad.
Scott Banda, FCL’s vice-president for corporate and legal affairs, said there is no doubt all sectors of the economy will face serious challenges in the coming year.
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But he believes the retail co-op sector is in a better position to withstand the storm than many other businesses.
“I can’t say we’ll have anywhere near the year we just had, but I think we’re well positioned, with the types of facilities we have and the commitment of our members to support us,” he said.
Banda said co-ops have a number of potential competitive advantages in tough economic times.
They’re locally owned, they deal largely in basic commodities like food, fuel and, for farmers, crop supplies, and they return savings and profits directly to the owner-members.
“I think the co-op model is at any time a good model, but particularly as things tighten up,” he said. “It’s solid, locally based and you’re the owner.”
FCL provides central wholesaling, manufacturing, marketing and administrative services to retail co-ops in more than 500 communities across Western Canada. The system is made up of 270 retail co-ops representing more than 1.3 million members.
The 2008 results represent a 55 percent increase in sales from the previous year’s $5.4 billion, and a 15 percent increase in earnings from $659.5 million.
Those results reflect in part the fact that FCL doubled its ownership stake in NewGrade Energy Inc., a heavy oil upgrader in Regina, to 100 percent from 50 percent during the year.
The company won’t release detailed financial results until its annual meeting in Saskatoon in March, but Banda said results were good in most sectors of its operations, including petroleum, general merchandise, food and crop supplies. Forest products didn’t do as well.
As for crop supplies, Banda acknowledged that rising crop input prices have been a sore point with many farmers, but said local outlets are free to offer programs to meet the needs of customers.
“I’d say our presence in the market was generally very positive this year,” he said.
FCL’s role is to generate savings and return them to the local co-ops to do with as they wish.
“In most cases they put cash back in members’ pockets, and that’s a pretty good program,” he said.
FCL returned $533.7 million of its $755.7 million in earnings to member retail co-ops. The remainder was retained by FCL for financing its operations.
