Online grocer targets positive cash flow next year but execution risks weigh on sentiment
Shares in Ocado Group PLC (LSE:OCDO), the online grocery technology group, fell 9.5% to 212.68p in early trading as investors looked past a sharp rise in earnings and focused on execution risks surrounding the company's cash flow targets.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 59% to £178 million as group revenue climbed 12.1% to £1.4 billion in the year to November 2025.
Technology Solutions, the core business that powers robot-operated warehouses for overseas grocery groups, grew EBITDA 73% to £140 million.
However, underlying cash flow remained negative at £213 million, widening from an outflow of £199 million the previous year.
The group said it expects to turn cash flow positive in the second half of 2026 and deliver full-year cash generation in 2027, while chief executive Tim Steiner said a "significant number" of jobs would be cut as part of £150 million in cost reductions.
Adam Vettese, market analyst for eToro said guidance for cash flow positivity and cost cuts "sounds promising, but investors are clearly unconvinced, prioritising execution risks over promises", adding that contract fragility and capital intensity remain unaddressed.
Ocado has faced setbacks from overseas partners, with Canada's Sobeys closing one robot-run warehouse and US customer Kroger shutting three fulfilment centres.