LONDON (Reuters) -Ocado, the British online supermarket and technology group, forecast faster growth this year after an improved performance at its automated warehouse technology unit helped it deliver better-than-expected annual core earnings.
Its shares rose 5% in early Thursday trading.
FTSE 100-listed Ocado runs an online supermarket in Britain through a joint venture with Marks & Spencer and also sells its cutting-edge warehouse technology to grocery retailers around the world, such as Kroger in the United States, Casino in France and Aeon in Japan.
It is the latter Technology Solutions division that has driven Ocado’s stock market value, which soared to around 22 billion pounds ($28 billion) during the pandemic but has since fallen to 4 billion pounds.
Analysts have expressed concern at the pace of client warehouse roll-outs and new client wins.
It said on Thursday it had signed a new partnership with a retailer in Saudi Arabia, Panda Retail Company, to support its e-commerce operations.
Ocado said on Thursday it made a pretax loss of 403.2 million pounds for the year to Dec. 3 2023, versus analysts’ average forecast for a loss of 410 million pounds and a loss of 500.8 million pounds in 2021/22.
Revenue rose 9.9% to 2.83 billion pounds.
At the core earnings level, Ocado returned to profit with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 54.2 million pounds, versus analysts’ average forecast of 44 million pounds and a loss of 74.1 million pounds in 2021/22.
That improvement reflected a return to profit at Ocado Retail, the joint venture with M&S, a first profit in Technology Solutions and stable profit in the logistics division.
CEO Tim Steiner said he was confident of “faster growth, stronger cash flows, and higher returns, in the current financial year and beyond”.
For the 2023/24 year, Ocado forecast revenue growth of 15% to 20% for the Technology Solutions division, with an EBITDA margin of over 10%.
It expects three automated warehouses to go live – two for Coles in Australia and one for Alcampo in Spain.
Ocado Retail’s revenue was forecast to grow in the “mid-high single digits”, with an underlying EBITDA margin of about 2.5%.
Stable revenue and earnings are forecast for the logistics division.
The group ended the year with liquidity of 1.2 billion pounds and forecast capital expenditure of about 475 million pounds in 2023/24.
($1 = 0.7898 pounds)
(Reporting by James Davey; Editing by Kate Holton and Mark Potter)
