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Ocado's shares jump after customer numbers increase 12%

ocado van image large
ocado van image large

LONDON – Ocado's shares jumped on Wednesday morning despite a drop in half-year profits, after reporting an increase in customers. 

Ocado's profit before tax in the first six months of 2017 was down £1.7 million, due in part to the costs associated with opening new facilities to "meet increasing demand," such as the distribution centre in Andover.

Net debt also rose to £102.4 million from £14.6 million last year.

Earnings were up 2.7% to £45.2 million. Orders jumped 15.6% and active customers increased by 12.7% year-on-year.

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Ocado's shares rose 1.49% at 08:48a.m. BST (03:48 EST) on Wednesday morning. 

"After several years of price deflation in the UK, we have seen this begin to ease in the period and, when combined with our increasing scale and operational efficiencies, this trend will support the continued profitable growth of our retail business," said Tim Steiner, CEO of Ocado.

"As the channel shift to online advances we continue to gain share in a competitive UK market. We expect the trend for grocery shopping online to continue as customers become more tech savvy and gain confidence in the online services available," he said.

"Ocado's first half earnings, issued this morning, are ever so slightly contradictory, with the company performing well in some instances but not so in others," said Jordan Hiscott, chief trader at ayondo markets. "The company is gi ong through an interesting phase, with a large focus on the technology side of the business, firstly with 'OSP', Ocado Smart Platform, and secondly with its testing of autonomous delivery vehicles," he said.

But, he said, Ocado "needs to be mindful" of its growing debt pile and its future position in the sector, particularly in light of Amazon's takeover of Whole Foods.

Here is the chart:

Ocado shares
Ocado shares

Investing.com

 

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