Ocado reveals £214m loss
Written by Peter Walker
Ocado has revealed a £214 million pre-tax loss for the year to 1 December, due to heavy investments in robotic warehouses overseas.
Despite group sales increasing 9.9 per cent to £1.76 billion, the online grocery business’ earnings before tax fell 27.2 per cent to £43.3 million.
This was attributed to factors including the continued impact of the fire at its Andover automated warehouse last year, on which it is still awaiting full payment of its insurance claim.
Its new joint venture with Marks & Spencer, which will see the retailer’s food sold online for the first time when it goes live in September, has also made it necessary to bring in new accounting standards which affected earnings.
This year Ocado plans to more than double its capital spending to over £600 million, as it begins launching automated warehouses with overseas partners, including Sobeys in Canada and Casino in Paris.
Chief executive Tim Steiner explained: “Our progress over the last 12 months, which includes signing our eighth and ninth solutions clients, Coles in Australia and Aeon in Japan, and successfully maintaining strong growth post-Andover, has demonstrated many of Ocado Group’s most important characteristics: resilience, innovation, focus and execution.
“The first half of this year will see a new milestone for Ocado Group; the opening of the first customer fulfilment centres for our international partners,” he continued, adding: “These state-of-the-art robotic facilities are a core part of an end-to-end solution embracing automated fulfilment, an intuitive and easy to use webshop, and hyper-efficient last-mile delivery which will enable Sobeys and Groupe Casino to deliver the same outstanding customer experience to consumers in Canada and France as Ocado Retail does today here in the UK.”
Daniel Harvey, a manager at technology consultancy BearingPoint, said: “The question which has always lingered around Ocado remains; are they a technology business with distribution capability (Ocado Solutions) or are they a distribution business who develop their own systems (Ocado Retail) – the debate continues as they deliver progress on both fronts.
“As the UK’s sustainability challenge heightens, Ocado could be uniquely placed to drive a grocery home delivery platform revolution; with Morrisons and M&S the key 2020 partners, who’s next?”