Ocado Group sees profits surge after strong first half

(Sharecast News) - Ocado Group has said its full-year outlook remains on track after swinging to a big profit in the first half, in which both the tech and logistics divisions delivered double-digit top-line increases.

The company, which offers grocery fulfilment tech as well as owning a 50% share in Ocado Retail with M&S, said that current exclusivity terms with customers are expected to "roll off" in multiple markets towards the end of the year, as it guided to a slight softening of revenue growth over the second half.

"Many of these markets have developed substantially in recent years and the online channel is fully established as the major growth driver in grocery globally. This is an exciting moment to bring the proven, enhanced and even more flexible Ocado offering back to these markets," said chief executive Tim Steiner.

Revenues in the six months to 1 June were up 13.2% at £674.0m, with Technology Solutions revenues up 14.9% and Ocado Logistics revenues up 12.1%.

Adjusted EBITDA surged to £91.8m from £52.0m the year before, while the company booked a statutory profit of £611.8m, compared with a loss of £153.3m previously, with Ocado Retail now reported as an "associated undertaking" following its deconsolidation in April, which resulted in a valuation gain of £782.6m.

Technology Solutions more than doubled operating profits to £72.8m from £34.8m, as adjusted EBITDA margins surged to 26.3% from 14.4%. Meanwhile, Ocado Logistics adjusted EBITDA rose to £19.0m from £17.2m.

For the full year, the company is targeting 10% revenue growth within the tech arm and a high mid-single digit percentage increase within logistics.

Ocado reported an underlying cash outflow of £108m by the end of the year, an improvement from the £201m outflow recorded the year before, with the group stating that its "core priority" was to turn cash flow positive next financial year as it works to improve operating costs, cost profile and capital efficiency.