SCOTMID has reported a steep fall in profits as chief executive John Brodie declared the “trading environment in 2022 was much more challenging than expected”.

The Edinburgh-based co-operative booked a trading profit of £3 million for the 52 weeks ended January 28, down £2.7m on last year, as it felt the impact of rising overheads and the cost-of-living crisis.

The Society said it has responded to the “turbulent” economic backdrop by reducing controllable costs, maximising sales opportunities, and strategic capital investment. In February it announced that 30 jobs were at risk at its Edinburgh headquarters as it moved to a “more streamlined operating model” and attempted to mitigate the impact of the cost inflation.

READ MORE: Isle of Arran restaurant Stags Pavilion on market for £475,000

Scotmid’s new accounts show a £3m rise in turnover to £406m.

Mr Brodie said this morning: “Our food convenience business faced the most significant challenges in the year. There were a number of factors that impacted performance including energy costs, food price inflation, pay rate growth and low consumer confidence from the cost-of-living crisis.”

“Last year-end, I highlighted the significant inflationary cost challenges facing the Society, but in reality, the background trading environment in 2022 was much more challenging than expected. The prolonged war in Ukraine, post-pandemic global demand, high UK inflation and, especially the rise in energy costs meant that both businesses and households have faced a cost-of-living crisis.”

“Most of our business cost increases were mitigated, but the energy cost escalation could not be covered by initiatives, especially in an environment where sales growth was challenging.”

READ MORE: Scottish dental group Clyde Munro secures its 80th acquisition

Scotmid, which was originally founded as St Cuthbert’s Cooperative Association in 1859, has interests ranging from grocery and toiletries retailing to property and funeral care. It employs nearly 4,000 people across its various operations.

Mr Brodie said: “Semichem made positive progress in its recovery from the negative impact of the pandemic and moved successfully to a new freehold warehouse.

“Scotmid’s property business delivered income growth, benefiting from the timing of investment property transactions and commercial property rent reviews. Scotmid funerals conducted a similar number of funerals as last year, with continued demand for full-service funerals, personalised in memory of loved ones.”

“Overall, this was a solid underlying financial performance by the Society, especially against a background of low consumer demand, soaring inflation and supply chain disruption. Significant capital investments were made for the long-term benefit of the Society and net assets increased by nearly £10m to an all-time high of £122.5m.”

“We continued to deliver community-based funding and support in line with our core purpose. In addition to local community grants, Community Connect scheme awards and our Winter Giving campaign for food banks, significant donations were made to several national and international good causes.”