Ocado delivery van in London on January 21, 2022.
Mike Camp | In Pictures | Getty Images
British Ocado On Tuesday, the company raised its annual guidance, citing improved profitability in its warehousing technology business, reassuring investors and sending shares up 18%.
The group operates an online grocery store through a joint venture with the UK Marks & Spencer and sells its cutting-edge warehousing technology to retailers around the world.
The company’s shares are down 55% this year as the rollout of bot sites and modules for its retail partners slowed, spooking the market.
But in early trading on Tuesday, shares rose 18% to 402 pence as its profit margin and cash flow guidance was raised, with Chief Executive Tim Steiner telling Reuters there was no reason for investors to worry.
“I’m not worried about investors losing confidence, because they shouldn’t lose confidence. We have a clear plan and we are executing on that clear plan,” Steiner said.
Citi analysts said the stock price reaction was expected given the upgrade in technology and cash expectations and the weakness in recent days.
Ocado said last month that its Canadian supermarket partner Sobeys had paused the opening of a fourth robotic warehouse, what Ocado calls a customer fulfillment center (CFC).
Ocado also saw it hook up Slowed website rollout in the US. Some analysts also believe Ocado will need to raise significant additional capital.
Ocado said it now expects its key technology solutions division to deliver “mid-teens” EBITDA margins for the full year 2023-24, compared with previous guidance of more than 10%.
It also forecast underlying cash flow to improve by £150m, up from its previous forecast of £100m, and said liquidity remained strong at £1.05bn.
First-half underlying earnings, or adjusted EBITDA, Ocado’s preferred measure, were £71.2m, up from £16.6m. Revenue grew 12.6% to £1.5 billion.
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