Ocado (OCDO) rises from the ashes as shares jump up 6%

Joint venture with Marks & Spencer has helped to boost performance this year.

Article updated: 9 July 2019 10:00am Author: Ian Forrest

  • Despite the impact of the fire at the Andover warehouse in February, costing the group £110.3m, prospects for the group are good.
  • Revenue in H1 rose 10.5% but the pre-tax loss increased to £43m with the company lowering its full-year earnings guidance.
  • We continue to recommend the shares as a ‘hold’ for investors seeking growth and willing to accept a medium to high level of risk.

Food delivery group Ocado reported interim results today which showed the cost of the fire at its Andover warehouse in February as £110.3m. Much of that will be covered by insurance payments over time, and the warehouse is being rebuilt. Revenue in the first six months rose 10.5% to £874m, but the pre-tax loss increased to £43m and the company lowered its full-year earnings guidance by £25m. However, prospects for the second half are good with a 10-15% rise in revenue expected for the food delivery side of the business along with improved profitability.

The shares responded positively to the news with a 6% rise in early trading. They’ve performed well so far this year, boosted by the joint venture with Marks & Spencer and the funds resulting from that which will help the technology side of the business to finance the building of new automated fulfilment centres. The strength of the technology business was rather overshadowed today but the 36% increase in invoiced fees, and the doubling of international fees, demonstrates the strength of that part of the business.

Our View on Ocado - Hold

We continue to recommend the shares as a ‘hold’ for investors seeking growth and willing to accept a medium to high level of risk.

If you're looking to invest in the General retail sector and you're not currently a customer of The Share Centre, sign up today. You can also view the full range of General retail companies and their share prices.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.