- Shares up 13% to 386p
- Revenue up 12.6% to £1.5 billion
- Adjusted EBITDA of £71.2 million
Shares in Ocado (OCDO) were up as much as 18% this morning before falling back as the online grocer raised its full year 2024 EBITDA (earnings before interest taxation depreciation amortisation) and cash flow guidance.
Underlying cash flow is expected to improve by £150 million (previously £100 million). The company’s technology solutions division expects to achieve a mid-teens EBITDA margin (greater than 10% previously).
The news of the raised guidance came as the company reported a pre-tax loss of £154 million after net adjusting items of £7.3 million for the 26 weeks ending 2 June 2024.
Revenue for technology solutions was up 22%, Ocado Logistics up 6% and Ocado Retail up 11% for the 26 weeks ending 2 June 2024.
There was additional good news for Ocado Retail as international market research firm Kantar published data showing that Ocado was the fastest growing grocer for the fifth month in a row with sales up by 10.7% over the 12 weeks to 7 July. The online-only retailer now holds 1.8% of the market, up 0.1% compared to last year.
ROLLERCOASTER RIDE
Ocado’s shares have been on a rollercoaster ride over the past 24-hours.
Shares fell sharply on 15 July when analyst Bernstein switched its rating from ‘outperform’ to ‘underperform’ and slashed its price target from £10 to 250p. This caused the stock to slump by 13%, making it the biggest faller on the FTSE 250 that day.
Ocado’s shares year-to-date tell another story down nearly 50%.
Russell Pointon, director of content, consumer & media at Edison said: ‘These results are a positive step, following some recent troubles related to Canadian supermarket chain, Sobeys, ending its partnership with the firm last month.
‘Today’s results were attributed to partner success, rollout of their Re: Imagined technology, efficient logistics, and their ‘Perfect Execution’ Programme in retail.’
Dan Coatsworth, investment analyst at AJ Bell said: ‘Driving the positive market reaction is an upgrade to adjusted earnings and cash flow, together with guidance for better margins and cost reductions.
‘This is music to the ears of investors, particularly as Ocado has been a jam tomorrow story for so long and now it might be in a better position to start delivering the goods financially in the not-too-distant future. It is still loss-making, but those losses are being narrowed.
‘Much of the company’s criticism has been centred on its slow progress in signing up new technology partners for its grocery logistics platform, as well as fragile relationships with its UK retail partner, Marks & Spencer.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) owns shares in Ocado and AJ Bell and the editor (Steven Frazer) owns shares in AJ Bell.
