Severe weather has been blamed for the drop.
Ocado reports half-year loss despite higher revenues
- Group hit by the Beast from the East, suffering a loss of £9m in pre-tax profit
- Nonetheless, the group did enjoy a 12.1% increase in revenues and reported an expanding customer base by 13%
- Shares remain difficult to value but we continue to recommend the group as a ‘hold’ for medium to high risk investors
This morning Ocado, the only dedicated online supermarket in the UK, reported its first half results. It posted a 12.1% increase in revenues, although it dropped from a pre-tax profit of £7.7m to a loss of £9m.
Revenue growth was impacted by severe weather but the number of active customers still increased by 13% to 679,000. The company has just opened its latest customer fulfilment centre which it claims is the largest automated warehouse for online grocery retail in the world. While the costs associated with that have dented profits in the first six months, the company expects those to improve significantly in the second half.
The results were clearly a little disappointing for the market and were greeted initially with a 6% drop in the shares in early trading. Some investors may have been hoping for more details on the highly significant deal with US group Kroger, one of the largest grocers in America, which was announced in May; but Ocado said today it would only provide more information when the deal is signed.
While sales are clearly growing and the group is building its capabilities internationally, earnings at the pre-tax level remain low which makes it harder to value. We continue to view the shares as a medium to high risk ‘hold.’
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