Ocado Group PLC (LSE:OCDO) saw growth in revenue and customer numbers last year, although orders and deliveries were impacted by the tight labour market and basket sizes dropped back to pre-pandemic levels.
Underlying profit (EBITDA) for the year to 28 November 2021 fell to £61mln from £73.1mln in 2020, in line with market forecasts and reflecting investment in the company's automated warehouses, with capital expenditure increasing by £154.8mln to £680.4mln, the company said in a statement.
Statutory pre-tax losses widened to £176.9mln from £52.3mln, reflecting increased investment in the Solutions business. The figure also included insurance litigation costs of £28.9mln, principally related to patent infringement litigation between Ocado and AutoStore Technology AS.
Group revenue for the year came in at £2.5bn, a rise of 7.2% on the previous year and 42.3% higher than in 2019, before the COVID-19 pandemic.
The Ocado Retail business reported sales growth of 4.6% to £2.3bn, which was 41.5% higher compared with 2019.
Retail sales were driven by a 22.4% increase in customer numbers to 832,000 and a rise in the number of orders of 11.9% to 357,000. But the easing of lockdown restrictions led to a drop in the average order size back towards pre-pandemic levels, with the average basket size declining 5.8% to £129.
In addition, order growth was hampered in the second half by the challenging UK labour market and reduced capacity at the Erith customer fulfilment centre (CFC) following a fire, Ocado said.
Labour shortages also affected deliveries, with drops per van per week declining to 177 from 184 in 2020, as a result of surplus vans.
The International Solutions business saw revenues increase to £66.6mln from £16.6mln, with the number of live sites doubled during the year.
Ocado forecast a return to mid-teens revenue growth in 2022 for Ocado Retail, its UK joint venture with Marks & Spencers, while in International Solutions, fee revenue from its Ocado Smart Platform (OSP) is expected to more than double with the increase of live international CFCs from four to 12.
Ocado Retail is aiming to rebuild its EBITDA margin towards 2021 levels following an investment of £50mln in 2022 to support long-term growth, the group said.
EBITDA is expected to rise by 50% in the UK Solutions & Logistics business in 2022, but stay flat in International Solutions.
Ocado forecast capital expenditure would rise to around £800mln in 2022, as it continues to roll out OSP worldwide.
"The past year has further reinforced that demand for online grocery is here to stay," commented chief executive Tim Steiner.
"In the majority of mature markets, the fastest growing channel is online and to truly win here food retailers need to deliver the best offer with the best economics across all customer missions.
"With the innovations to the Ocado Smart Platform announced in January 2022, we have again re-set the bar, demonstrating decisively that an online grocery service powered by OSP is able to offer what the customer wants with the economics the retailer needs".
The company said the litigation between itself and AutoStore continues, with AutoStore's UK High Court infringement claim is scheduled to begin in the High Court in mid-March.
Separately, Ocado actively continues to pursue its claims against AutoStore for infringement of Ocado's patents in both the United States and Europe.
Ocado had cash of £1.5bn at the year-end, supporting its UK and International growth plans. Net debt stood at £359.8mln.
Ocado shares fell 7.85% to 1,296.50p in early trade.