Ocado warns of 2022 earnings as investment weighs

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  • 2021 core earnings fall 12.1%
  • Warns that 2022 core earnings will not meet market expectations
  • Capex will reach around stg 800 million in 2022
  • Said has an encouraging pipeline for new deals
  • Shares down 9.2%

LONDON, Feb 8 (Reuters) – Ocado Group (OCDO.L), Britain’s online supermarket and technology company, has warned that core earnings in 2022 will fall below market expectations as it steps up investment in automated warehouses around the world, hammering its actions.

The stock was down 9.2% at 1051 GMT on Tuesday, taking last year’s losses to 53%, also reflecting investor concerns over the ongoing litigation with Norwegian rival AutoStore (AUTO.OL). .

Ocado reported a 12.1% drop in earnings before interest, tax, depreciation and amortization (EBITDA) to £61.0 million for its financial year ending November 28, as investments in the business more than offset an increase in income.

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The result was slightly above the average analyst forecast of 60 million pounds.

They on average expected EBITDA to rebound to £92m in 2022.

However, Ocado’s chief financial officer, Stephen Daintith, told reporters the group plans to invest £30m more in its International Solutions technology business in 2022 than the market had expected.

“This would therefore imply £30m lower EBITDA for this segment in 2022 than the current consensus and therefore a similar lower level for the group figure,” he said.

Ocado forecasts stable EBITDA for International Solutions in 2022, with a 50% increase in technology activity in the UK.

‘Bots’ are seen on the grid of the ‘intelligent platform’ at the Ocado CFC (Customer Fulfillment Centre) in Andover, Britain May 1, 2018. REUTERS/Peter Nicholls

The investment in 2022 will support the launch of nine automated warehouses as well as technology development.

Ocado has already entered into partnership agreements to supply its technology to supermarket groups in eight countries, including Kroger (KR.N) in the United States, Aeon (8267.T) in Japan, Casino in France and Coles (COL. AX) in Australia. .

It has an “encouraging” pipeline for new deals and was in talks with a number of retailers, he said.

Last week, Ocado unveiled a suite of technological innovations ranging from lightweight robots to high-tech van routing systems that it said would boost its yields and win new customers. Read more

“I cannot underestimate the importance of these initiatives to us, our partners, and to the future of the grocery market globally,” CEO Tim Steiner told reporters.

Ocado’s pre-tax loss widened in 2021 to £176.9m, while revenue rose 7.2% to £2.5bn.

Capital expenditure has increased to £680.4m and is expected to reach £800m in 2022 as new sites come online and others are put in place.

The group expects the Ocado Retail business, a joint venture between Ocado Group and Marks & Spencer (MKS.L), to return to “mid-teens” revenue growth in 2022, following growth of 4, 6% in 2021. read more

($1 = 0.7393 pounds)

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Reporting by James Davey; Editing by Kate Holton, Louise Heavens and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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