Ocado’s Technology Solutions division turns a profit for the first time
Ocado jumps on return to first-half underlying profit
First-half underlying profit 16.6 mln stg
Losses at pretax level widen to 289.5 mln stg
Shares up 13.5%
CEO declines comment on Amazon takeover speculation
Ocado, the British online supermarket and technology group, returned to underlying profit in its first half and stuck to its guidance, saying its retail operation won more customers and its robotics business progressed, sending its shares soaring.
The group swung to a profit for the six months to May 28, posting core earnings (EBITDA) of 16.6 million pounds ($21.7 million), ahead of a consensus forecast for a loss of 16 million pounds, and reversing a loss of 13.6 million pounds in the year-earlier period. Ocado said its Technology Solutions division made a profit for the first time, while its Ocado Retail business, the online supermarket joint venture it operates with Marks & Spencer, returned to profit in the second quarter.
Shares in Ocado were up 13.5% in morning trading but are down 15% over the last year.
"There is clear upwards pressure on full-year 2023 consensus expectations," said analysts at Jefferies said.
Ocado's cutting edge robotic warehouse technology has helped it bank multiple international clients, including retailers such as Kroger in the United States, Aeon in Japan and Casino in France.
Founded by three former Goldman Sachs bankers in 2000, including CEO Tim Steiner, Ocado has divided analysts and investors like few other stocks.
Some view its home deliveries from giant automated warehouses as the future of grocery shopping, while others see it as a costly and complicated venture that will never make sustained profits.
Shore Capital analyst Clive Black, a long term Ocado sceptic, focused on Ocado's losses at the pretax level, which widened to 289.5 million pounds.
"The numbers remain grim, time is running out for this story, with the jam drying up," he said.
Ocado said there was no change to the financial guidance given at its full-year results in February.
It maintained its guidance for Technology Solutions to deliver "positive" EBITDA over the full 2022-23 year, with Ocado Retail making "marginally positive" EBITDA, and its UK Logistics unit making "stable" EBITDA.
The group's shares soared much as 47% on June 22 after the Times newspaper reported possible takeover interest from more than one U.S. suitor including Amazon (AMZN.O). Ocado and Amazon declined to comment at the time.
"Speculation is speculation, I have nothing to say," Steiner told reporters on Tuesday.
Source Article: Reporting by James Davey; editing by Kate Holton, Jason Neely and Mike Harrison
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