Ocado Group PLC (LSE:OCDO) reported flat revenue and widened full-year losses on Tuesday as cost pressures and investments made to support Ocado Retail took their toll.
The online food retailer said revenue was broadly flat at £2.5bn in the 12 months to 31 December 2022, up 0.6%, with strong growth in Solutions revenue offset by a decline at Ocado Retail. Ocado Retail's revenue fell 3.8% to £2.2bn, with robust customer growth offset by lower value baskets.
Pre-tax losses widened to £501mln compared to £176.7mln in 2021 due to rising costs and investments made at Ocado Retail and £349mln depreciation and amortisation.
Ocado Retail, a joint venture between Ocado Group and Marks and Spencer Group PLC (LSE:MKS), posted an EBITDA loss of £4mln compared to a profit of £150.4mln in 2021.
The company said liquidity remained healthy with a cash balance of £1.3bn, following the equity raise in June.
Looking to 2023, Ocado Group said revenue at Ocado Retail is expected to show mid-single digit growth with an improving trajectory during the year, reflecting a return to volume growth as the challenging comparison to larger volume basket shopping behaviours that remained in early 2022 fades.
EBITDA at Ocado Retail is forecast to be marginally positive. “It is likely that EBITDA will be negative in the first half and positive in the second half, as a return to volume growth supports improved capacity utilisation and reduced costs relative to sales,” the firm said.
Chief executive Tim Steiner said: “Ocado Retail, our UK JV with M&S, has shown its resilience against a backdrop of higher costs and smaller baskets, reflecting the Covid unwind and the UK cost of living crisis, by growing customer numbers and increasing online market share.”
“As the Covid unwind fades and customer growth continues the business will start to recover the fixed costs of recent capacity commitments.”
“Our strong balance sheet gives us the means to finance our growth through the mid-term (4-6 years) by which time we expect Ocado Group to be cash flow positive with the cash flows from existing CFCs sufficient to finance future investments.“