Ocado Focuses on Generating Cash in Next Financial Year
By James Davey
LONDON (Reuters) – Ocado, the British online supermarket and technology group, reported a 77% increase in first-half underlying earnings, with a primary focus on generating cash in its next financial year. The company’s shares rose following the announcement.
Operating an online supermarket through a joint venture with Marks & Spencer, Ocado’s market value is largely driven by the sale of its advanced robotic warehouse technology to retailers worldwide.
Ocado aims to become cash-flow positive during its 2025/26 fiscal year, starting in December, by reducing costs and achieving full-year cash positivity in the subsequent year. Finance chief Stephen Daintith expressed confidence in the company’s progress, citing lower cash outflows, a declining cost base, and a 15% revenue increase in the technology division.
Despite facing challenges such as the slow roll-out of automated warehouses by key partner Kroger in the U.S., Ocado expanded its partnership with Spanish supermarket group Bon Preu. The company plans to launch eight more customer fulfilment centres in the coming years. CEO Tim Steiner anticipates signing new grocery clients as exclusivity terms with existing partners expire later this year.
Analyst William Woods raised concerns about the potential impact of new partnerships on existing relationships, suggesting that it may signal deteriorating partnerships.
In the first half of the year, Ocado reported adjusted EBITDA of 91.8 million pounds, a significant increase from the previous year. The company also saw a rise in revenue to 674 million pounds and turned a statutory profit of 611.8 million pounds, attributed to changes in accounting for its stake in the Ocado Retail joint venture.
Ocado maintains its expectations for the full year, with no changes.
($1 = 0.7468 pounds)
(Reporting by James Davey. Editing by Paul Sandle, Mark Potter, Philippa Fletcher)
