Ocado's shares saw an 18% increase following the company's announcement of reduced losses and raised projections for its technology division, which supplies warehouse automation robots to global retailers.
Ocado reported a near 22% year-on-year growth in technology revenue over the six months leading up to June 2nd, with an 11% increase in grocery sales through its partnership with Marks & Spencer. The UK's fastest-growing grocer for five consecutive months according to Kantar data analytics was Ocado.
The technology division is now anticipated to achieve a mid-teens EBITDA margin this year, an improvement from the initial forecast of more than 10%. The company's total pre-tax loss decreased in the first half compared to last year, amounting to £154m.
Investor confidence was bolstered by these improvements, resulting in a significant rise in Ocado shares, which currently stand at 378.53p, up from their earlier high of 409.1p. However, the share value has experienced a decline of nearly 47% over the year due to concerns about clients like Sobeys and Kroger in the US delaying warehouse automation rollouts.
Tim Steiner, Ocado's CEO, stated that although online shopping trends had decreased post-pandemic as physical stores reopened, a global shift back towards e-commerce has resumed. He dismissed concerns about the future of technology stock listings in the UK market, emphasizing his focus on serving clients effectively rather than considering other markets for listing.
Despite lower grocery inflation rates compared to last year's double-digit increases, Steiner noted that consumers are still affected by rising prices. According to Kantar data, grocery inflation currently sits at 1.6%, below average wage growth. However, he acknowledged the ongoing challenges faced by consumers due to cost pressures.
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