Ocado Group PLC (LSE:OCDO) reported lower revenues and bigger losses for the first half but insisted it has a “clear path” to at least £750mln of underlying earnings within four to six years.
Revenues of £1.26bn were generated by the online grocery group, down 4.4% on a year ago as gains for its Solutions software arms were offset by a decline for its UK retail joint venture with Marks & Spencer Group PLC.
The Retail arm’s £1.1bn was down 8.3%, while the UK Solutions & Logistics business saw revenues rise 10.7% to £395.6mln and International Solutions revenues jumped 120% to 58.5mln.
Retail’s decline reflected the 12% rise in active customers year on year being offset by changing customer behaviour leading to fall of 13% in baskets sizes, further compounded by the cost-of-living crisis in the UK.
Four more robot-run ‘customer fulfilment centres’ (CFCs) are planned for the UK business, Ocado said, with a further two smaller Ocado Zoom facilities to be opened by the end of the year, in Leyton and Leeds.
So far there are 10 international CFCs currently up and running, the group said, compared with four a year ago, with chief executive Tim Steiner saying 16 are “open” out of 58 committed by customers so far that will eventually “generate dependable, recurring cash flows and attractive returns on capital”.
A £13.6mln underlying loss (LBITDA) was reported as profits fell at both the Retail and UK Solutions arms, while International Solutions losses were broadly flat.
Statutory losses before tax rose to £211.3mln from £27.9mln a year ago.
Net debt stood at £759mln at the half year, which includes just over £1bn in cash after the £578.2mln fundraising in June that was accompanied by the securing of a new £300mln revolving credit facility.
Reiterating comments from the recent fundraising drive, Steiner said: “We now have a strong financial position and ample liquidity to fund the requirements of our existing and expected customer commitments into the mid-term.
“No additional group financing will be needed as the business becomes cash flow positive.”
The company reiterated its confidence that it has “a clear path to >£6.3 billion in revenue and >£750 million in EBITDA in the mid-term”.
After initially falling 2% in early trading, the shares were up 1% at 782p after an hour.