Ocado Group, the British online supermarket and technology group, fell to a worse than expected full-year loss, as it took a big accounting charge and profits at its joint venture with Marks & Spencer were wiped out.
The group, whose shares have more than halved over the last year, made a loss before tax of £501 million (€570 million) over the year to 27 November 2022.
That compared to analysts' average forecast for a loss of £399 million (€454 million) and a loss of £176.9 million (€201.5 million) in the previous year.
Group revenue was broadly flat at £2.5 billion (€2.8 billion).
Ocado Group And M&S
Ocado Retail, the 50:50 joint venture between Ocado Group and M&S, made a loss of £4 million (€4.5 million), having made earnings of £150.4 million (€171 million) in the previous year.
Its revenue fell 3.8% as even its typically more affluent shoppers felt the squeeze from higher inflation and energy bills.
The group's pretax loss also reflected a £349 million (€397 million) charge for depreciation and amortisation.
Ocado's £5 billion (€5.6 billion) market capitalisation has been driven by technology partnership deals with overseas food retailers, including Kroger in the United States
'Pipeline For New Partners Is Strong'
Despite the wider loss, CEO Tim Steiner said "we have more confidence in our model than ever before," highlighting the roll out of 12 automated warehouses for partners around the world in 2022.
"The pipeline for new partners is strong," he added.
At the core earnings, or EBITDA, level Ocado made a loss of £74 million (€84 million) - also worse than analysts' average forecast for a loss of £66 million (€75 million) and versus earnings of £61 million (€69 million) in the previous year.
'Strong Balance Sheet'
For 2023, the group forecast 'marginally positive' EBITDA for Ocado Retail, 'positive' EBITDA for the technology solutions division and 'stable' EBITDA in UK logistics.
The group ended the year with a cash balance of £1.3 billion (€1.48 million).
"Our strong balance sheet gives us the means to finance our growth through the mid-term (4-6 years)," added Steiner.
The boss of Ocado Group said he is convinced online penetration of the country's grocery market will increase from the current 11%.
Online grocery's share of the total grocery market in Britain was about 7% before COVID-19. It peaked at about 15% during the pandemic and has since come off to about 11%.
"I just absolutely don't believe we're going to stick at this level and also anyway we're acquiring market share from our competitors and will continue to do so," Ocado CEO Tim Steiner told reporters.
"What we're back into is the channel shift that we were engaged in for the first 20 years of our existence until we hit the pandemic," he said.
News by Reuters, edited by by ESM – your source for the latest technology news. Click subscribe to sign up to ESM: European Supermarket Magazine.