Ocado Group PLC forecasts £700mln yearly capital expenditure in new year as
The online grocer is planning further investment in the UK and internationally but revenue growth depends on COVID-19 restrictions
() said total capital expenditure in the current financial year will be around £700mln, while last year’s losses were reduced more than fivefold.
The online grocer is planning further investment in the UK and the rollout of its international customer fulfilment centres.
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In the year to next November, retail revenue growth will be highly dependent on how coronavirus (COVID-19) restrictions are eased.
The FTSE 100 firm is ramping up capacity in the UK which should lift revenue and bring underlying earnings (EBITDA) back to 2019 levels in the Solutions & Logistics arm.
International revenue is expected to come in at £50mln as invoiced International Solutions fees are estimated to surge 30%, however EBITDA will be lower due to high levels of investment.
Overall, full-year revenues are expected to increase by £30mln following the acquisition of Kindred Systems and Haddington Dynamics, with a small negative impact on EBITDA.
The company also anticipates it will incur significantly more legal costs than in 2020 after being sued by Norwegian rival AutoStore over claims of a patent breach.
Ocado said “we remain of the view that we do not infringe any valid Autostore rights”.
In the year to November 29, 2020, revenues climbed 33% to £2.3bn, with retail up 35% and UK Solutions & Logistics up 14%.
EBITDA soared 70% to £73mln, with retail rocketing 266%, although UK Solutions & Logistics and International Solutions were down 39% and 52% respectively.
Loss before tax was reduced to £44mln from £214mln the year before, while Ocado ended the period with £2bn of cash and cash equivalents.
“Ocado’s unique business model, combining high-tech with traditional grocery, is slowly beginning to reap the rewards of extensive investment,” said Richard Hunter, Head of Markets at interactive investor.
“The results reflect the period to the end of the November so do not incorporate any festive bounce Ocado may have enjoyed, although recent numbers from Marks & Spencer certainly imply that the joint venture continues to grow apace through Ocado Retail.”
“While the combination of a grocer benefiting from the current pandemic and a high tech business gives investors two bites at the cherry, the stratospheric rise of the share price may have prompted some to take profits, with the market consensus of the shares having recently slipped to a sell as new developments are awaited.”
Shares shed 2% to 2,700p on Tuesday morning.
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