The Ocado (LON:OCDO) share price is higher this morning on the back of the first-half figures. Revenue for the period jumped by 10.5% and to £874 million, on an adjusted basis. Retail revenue increased by 9.7% and fees invoiced from solutions partners jumped by 36%.
The group is now seeing the fruits of its labour as the partnerships are clearly paying off. Adjusted earnings for the six months was £18.7 million, which was a drop of 46.2%, but that reflects the impact of the fire at Andover. The numbers were good, but the outlook was even better. The company was ‘very pleased’ with the performance, and it is ‘excited about the future’, and it has the capacity to sign more deals in other countries too.
In February, the company posted a full-year pre-tax loss of £44.4 million, which was big difference from the £9.8 million profit it posted the year before. Annual revenue jumped by 12.3%, which showed that its popularity is growing. Ocado cited increased investment in its business model and the partnership deal as a reason for the loss, which is isn’t a major issue as investing in the future is often a short-term loss, and a long-term gain. Active customer and total order volumes increased by 11.8% and 12.1% respectively, but the average basket shrunk size fractionally.
The group is prepared for Brexit: it bought in mechanical spare parts to ensure the smooth running of the warehouse facilities.
In 2019, the company broadly had a positive run. In March the group confirmed it was entering into an agreement with Coles of Australia. The deal was the fifth joint venture that it had struck in 18 months, and the aim is to have a fulfilment centre in Sydney and Melbourne that are operational in four years. Ocado spent a lot of time and money developing its business structure, and in relatively short period of time, the firm managed to broker deals around the globe.
The group had some misfortune in March, when a fire broke out at the Andover fulfilment centre, but the damage wasn’t too bad. The incident was equivalent to just over 1% of first-quarter revenue, but it did rattle some investors. The group has pledged to build a new replacement facility. The company has now taken the steps to ensure that there won’t be a similar incident as it has installed heat sensors as well as additional spoke detectors.
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