Ocado Group PLC (LSE:OCDO) posted a lesser-spotted profit for the past year, if various exceptional items are ignored, sending its shares flying higher in early trading.
However, the shares quickly lost their lustre as the company acknowledged it may need the help of lawyers to get paid by Marks and Spencer Group PLC (LSE:MKS) over their Ocado.com joint venture.
It said the JV "failed to meet the performance measures" for the past financial year that were required for the payment, but the 2019 contract includes provisions for the target to be adjusted in some instances and it believes it will get paid sometime in the future, but this may be "via a formal litigation process or settlement".
Focusing on the more positive elements in the results, there were contributions from all main parts of the group, which meant reported adjusted earnings (EBITDA) came to £51.6 million in the 53 weeks ended 3 December 2023, compared to a £74.1 million loss a year earlier.
This reflected a maiden £15.4 million underlying profit from its Technology Solutions arm, which provides robot-operated warehouses and other tech for supermarket groups around the world, and another £30.1 million from Ocado Logistics, the division that provides deliveries for Morrisons and the Ocado.com joint venture with Marks & Spencer.
The JV also returned to a positive adjusted EBITDA of £10.4 million.
Chief executive Tim Steiner hailed cost reductions across the group from operational efficiencies and lower support costs and the opening of three new state-of-the-art robotic warehouses, or customer fulfilment centres (CFCs) as the group calls them.
Ocado had 26 sites live at the end of the financial year, of which 22 were full CFCs and four were smaller Zoom sites.
However, at the bottom line, the group’s numbers remain in the red, with a loss before tax of £393.6 million down from £0.5 billion last time, though this takes into account the £187 million legal settlement received from Swedish ‘robot wars’ rival AutoStore.
There was also an underlying cash outflow of £473 million, though this was down from £828.2 million the year before.
With positive earnings achieved, a first deal outside of grocery signed and a first deal in pharmaceuticals, Steiner said Ocado had made “big, tangible steps forward” during the year but said there remains “much more to come and much more to do”.
Ocado shares jumped 8% in early trading to 531p, but after just over an hour had slid back to 499.5p, a gain of 1.8% on the day.