Ocado determined to rise from the ashes as warehouse fire hits profits
Chief executive Tim Steiner said the group had many opportunities for growth.
Ocado has unveiled widening losses as it laid bare the impact of a fire at one of its warehouses, but the group said it is still confident in its growth prospects.
The online grocer reported a loss before tax of £142.8 million for the 26 weeks to June 2, marking a significant increase on the £13.6 million loss reported last year.
Adjusted retail revenues were up 9.7% to £803.2 million, though this would have been around 11.7% without the impact of the fire.
Meanwhile, adjusted underlying earnings almost halved to £18.7 million.
The company said the dip in profitability was down to the impact of the fire at its facility in Andover, Hampshire, the cost of share incentive schemes for management, and a delay in recognising fees from its partnerships with overseas retailers due to accounting standards.
Write-offs related to the fire will eventually be paid back by insurance, but have been recognised as one-off costs in the accounts.
For the full year, the fire is now expected to have a £15 million impact on earnings.
Share schemes, which are dependent on the company’s share price, will also have a £10 million impact due to the rise in the stock’s value over the past year.
Despite the setbacks, the company still expects retail revenue growth of between 10% and 15% in the second half of the year
It comes as Ocado shifts its focus following the announcement of a joint venture with Marks & Spencer.
The deal will replace an existing partnership between Ocado and Waitrose next year.
The group is also on the hunt for more deals to provide technology services to retailers, which is a growing source of income. Fees invoiced from international partners almost doubled in the first half to £46.7 million.
Chief executive Tim Steiner said: “We have never had as many opportunities to grow as we do today.
“As we look to successfully scale our business and deliver outstanding execution to our partners, our challenge will be to select and prioritise the most attractive of these opportunities.”
Shares in Ocado were trading almost 6% higher on Tuesday morning, with analysts expressing relief that sales growth was still solid.
John Moore, senior investment manager at Brewin Dolphin, said: “Revenue growth remains strong at Ocado, despite the major setback of the fire at its Andover facility earlier in the year.”
He added: “The key to future growth will be strong execution of the work in hand and conversion of immediate opportunities.”