Ocado cuts losses to £2.4m
OCADO said warehousing problems that prompted it to issue a profit warning last month were largely solved as the online grocer posted a pre-tax loss of £2.4m for the year to the end of November 2011.
In its second set of preliminary results since its flotation in 2010, Ocado said it had cut its losses by 80 per cent compared with the previous year, when the firm reported a pre-tax loss of £12.2m.
Tim Steiner, Ocado’s co-founder and chief executive, said Ocado has made “significant progress in growing sales and increasing capacity to support future growth”.
The group, which mostly sells the products of upmarket grocer Waitrose, said sales increased by 16.6 per cent on the previous year to £598.3m
Earnings before interest, tax, depreciation and amortisation were £27.9m. That was in line with reduced analyst expectations – after its December profit warning – of £28m and up from £22m the year before.
In December, Ocado said earnings had been hit by higher staffing costs as it battled to overcome capacity constraints at its main distribution depot in Hatfield.
Steiner said these constraints had eased and the group planned to take capacity at Hatfield to 160,000 orders a week by the end of the year, up from a 2011 peak of 131,381 orders. A second distribution centre will open in Warwickshire in the first quarter of 2013.
Ocado, which has yet to report its first pre-tax profit since forming 10 years ago, saw its share price rise 8.6 per cent yesterday to 87.1p – still less than half its 180p flotation price.
Shore Capital analyst Clive Black said yesterday’s results “can be measured as a sense of relief” but reiterated doubts over the firm’s prospects.
“Without a material step up in margins and so profitability we continue to harbour concerns that Ocado can function as presently constituted.”