Online grocer and technology firm Ocado Group has reported a 12.1% fall in annual core earnings, with investment in the business more than offsetting an increase in revenue.
The group's earnings before interest, tax, depreciation and amortisation (EBITDA) totalled £61.0 million (€72.3 million) in the year to Nov. 28 2021 - in line with analysts' average forecast of £60 million but down from £73.1 million (€86.7 million) in the 2019-20 year.
Its pretax loss widened to £176.9 million (€209.8 million).
Automated Warehouse Rollout
Revenue rose 7.2%, boosted by a strong end to the year, while capital expenditure increased to £680.4 million (€806.7 million), reflecting increased investment in the roll-out of automated warehouses in the UK and overseas, along with investment in technology development and platforms.
"The past year has further reinforced that demand for online grocery is here to stay," commented Tim Steiner, Ocado Group chief executive. "In the majority of mature markets, the fastest growing channel is online and to truly win here food retailers need to deliver the best offer with the best economics across all customer missions."
Ocado forecast capital expenditure would increase in 2022, driven by the worldwide roll-out of its platform.
The group has already struck partnership deals to provide its technology to supermarket groups in eight countries, including Kroger in the United States, Aeon in Japan, Casino in France and Coles in Australia.
Ocado Retail Set For Growth
It forecast the Ocado Retail business, a joint venture between Ocado Group and Marks & Spencer, would return to 'mid-teens' revenue growth in 2022, fee growth of over 30% in its UK technology business, with fee revenue to more than double in its international technology business.
Ocado also forecast a 50% increase in EBITDA in the UK technology business, with EBITDA in the international technology business flat.
"Over the last twenty years, Ocado Group has been a pioneer in the development of online grocery retailing," Steiner added. "With the innovations to the Ocado Smart Platform announced in January 2022, we have again re-set the bar, demonstrating decisively that an online grocery service powered by OSP is able to offer what the customer wants with the economics the retailer needs".
Prior to Tuesday's update, analysts' average forecast for Ocado Group EBITDA in 2022 was £92 million.
Shares in Ocado are down 50% over the last year, partly reflecting investor concern over ongoing two-way litigation on patents with Norwegian rival AutoStore.