Ocado Group (LSE:OCDO) rose 5.3pc to 1,232.5p on Tuesday morning after maintaining an optimistic outlook in spite of a £110m hit from a savage fire in February.
In its half-year results, the firm, which delivers food for UK supermarkets, said £11.8m of insurance proceeds have already partially offset the impact of the blaze at its Andover distribution centre. It eventually expects to be able to reclaim all of the cost.
Despite this, the incident drove it to a half-year loss of £142.8m and knocked 2pc off its sales. Meanwhile, the business said that, for the year as a whole, there would be a £15m impact on earnings from “Andover-related business disruption”.
This prompted analysts to more than halve their profit forecasts for the group. For example, the Financial Times reports that house broker Numis said Ocado’s full-year EBITDA is now likely to be £20m, £25m less than analysts were expecting.
Regardless, Ocado continued largely unperturbed, writing down the remaining £98.5m value of the centre as an exceptional loss and claiming that it has ‘never had many opportunities to grow as it does today’. Indeed, on a brighter note, revenues from the firm’s retailing arm grew 10pc to £812m over the period. Meanwhile, its technology business saw its revenues rise by a fifth year-on-year to £71m.
Looking forward, Ocado has also clinched a major deal with Marks and Spencer, giving the latter a home delivery service for the very first time. It has also signed agreements with Coles of Australia and Sobeys in Canada to develop delivery facilities. Likewise, chief executive Tim Steiner said the business was also looking for other ways to use its software and robotics expertise.
‘In the last six months, the centre of gravity at Ocado Group has shifted. Our exciting new joint venture with M&S creates further growth opportunities for both parties in the U.K. and allows Ocado Group to increase focus on growing our Ocado Solutions business and innovating for our partners. At the same time we are beginning to apply our technology skills and expertise to other related activities which we expect to be of benefit to our Solutions partners as well as to other Ocado Group stakeholders,’ he said.
‘The innovation factory we have created is founded on a near twenty-year heritage of constant re-examination and reinvention of technology to provide the best customer experience. We have never had as many opportunities to grow as we do today. As we look to successfully scale our business and deliver outstanding execution to our partners, our challenge will be to select and prioritise the most attractive of these opportunities.’