Ocado climbs double-digit in London after half-year accounts and guidance hike

(Il Sole 24 Ore Radiocor) - Ocado rebounded strongly on the London Stock Exchange on the back of better-than-expected half-year accounts and higher guidance for 2024. The online supermarket and retail technology provider's stock gained nearly 16 percent to top the Stoxx Europe 600 Index, after having dropped 10.4 percent on the eve of the trading due to Bernstein's heavy downgrade. Since the beginning of the year, the stock has lost about 49%. Ocado reported that in the first half of the year (the 26 weeks to 2 June)group revenues rose to £1.54 billion, up 12.6%, driven in particular by Technology Solutions (+22% to 241 million), as well as Ocado Retail (+11% to 1.3 billion) and Ocado Logistics (+6% to 354 million). Adjusted Ebitda jumped to GBP 71.2 million from GBP 16.6 million, driven by a strong rebound in Technology Solutions (35 million from 5.9 million), thepositive result from Ocado Retail (20.7 million from -2.5 million) and an increase (+2.6% to 17 million) in Ocado Logistics.

Depreciation and amortisation totalled EUR 210 million from EUR 192 million, and financial expenses rose to EUR 33 million from EUR 27 million. The pre-tax loss, however, almost halved, falling to 154 million from 290 million. Underlying cash outflow was £197m, an improvement of £101m from a year ago, driven by higher revenues, rising Ebitda margins, lower capital expenditure and good cost control. Cash 'remains strong' at £1.047bn from £1.3bn, Ocado points out. The group has raised its 2024 guidance and now expectsimproving underlying cash flow of £150m (up from £100m previously) and an Ebitda margin for Technology Solutions of around 15-17% versus 'over 10%'.

Capital expenditure is projected at EUR 425 million from EUR 475 million, due to improved utilisation of inventory. "Today's results illustrate the good progress we have made as we support thirteen of the world's largest grocers in growing their business online with our technology. We have weathered an all-time high in this industry, with several years of high food inflation following strong demand during the pandemic," commented CEO and co-founder Tim Steiner. For analysts at RBC, Ocado's overall first-half performance is especially welcome in light of the bearish positioning on the results, as the shares fell 10% on Monday and more than 20% over the past three months. Experts at the Canadian bank note that turnover and adjusted EBITDA are above consensus and that the group has also raised its forecasts for 2024.