Ocado warns of 2022 core earnings as investment weighs

0

‘Bots’ are seen on the grid of the ‘smart platform’ at the Ocado CFC (Customer Fulfillment Centre) in Andover, Britain May 1, 2018. REUTERS/Peter Nicholls

Join now for FREE unlimited access to Reuters.com

Register

  • 2021 core earnings fall 12.1%
  • Warns that 2022 core earnings will not meet market expectations
  • Capex will reach around stg 800 million in 2022
  • Said has an encouraging pipeline for new deals
  • Shares down 10.3%

LONDON, Feb 8 (Reuters) – Ocado Group (OCDO.L), Britain’s online supermarket and technology company, warned on Tuesday that core earnings in 2022 will fall below market expectations as it steps up investment, hammering his actions.

The group recorded a 12.1% decline in earnings before interest, tax, depreciation and amortization (EBITDA) to £61.0 million in the year ending November 28, 2021 as investments in the business having more than compensated for an increase in income.

The result was slightly above analysts’ average forecast of 60 million pounds, but down from 73.1 million pounds in 2020.

Join now for FREE unlimited access to Reuters.com

Register

Analysts on average expected EBITDA to rebound to £92m in 2022.

However, chief financial officer Stephen Daintith told reporters the group plans to invest £30 million more in its International Solutions technology business in 2022 than the market had expected.

“This would therefore imply £30m lower EBITDA for this segment in 2022 than the current consensus and therefore a similar lower level for the group figure,” he said.

Ocado forecasts stable EBITDA for International Solutions in 2022, but a 50% increase in technology activity in the UK.

Ocado shares were down 10.3% at 0912 GMT, taking last year’s losses to 54%, also reflecting investor concern over the ongoing bilateral patent dispute with its Norwegian rival AutoStore (AUTO.OL).

Ocado’s pre-tax loss widened in 2021 to £176.9m from £52.3m in 2020.

Revenue rose 7.2% to £2.5 billion, while capital expenditure increased by £154.8 million to £680.4 million, reflecting increased investment in the deployment of automated warehouses in Britain and overseas, as well as investments in technology development and platforms.

Ocado expects capital expenditure to reach around £800 million in 2022, driven by the global rollout of its platform.

The group has already entered into partnership agreements to supply its technology to supermarket groups in eight countries, including Kroger (KR.N) in the United States, Aeon (8267.T) in Japan, Casino in France and Coles (COL .AX) in Australia.

Ocado said it has an encouraging pipeline for new deals.

It forecast the Ocado Retail business, a joint venture between Ocado Group and Marks & Spencer (MKS.L), to return to “mid-teens” revenue growth in 2022.

It aims for Ocado Retail’s EBITDA margin to rebuild towards 2021 levels after a year of investment in 2022.

($1 = 0.7393 pounds)

Join now for FREE unlimited access to Reuters.com

Register

Reporting by James Davey; Editing by Kate Holton and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

Share.

Comments are closed.