Ocado shares rose on Thursday after the food technology and premium online grocery company announced rising revenues and a swing to positive EBITDA.
Ocado Group saw strong revenue growth in 2023, with total group revenue increasing 9.9% to £2.8 billion.
This growth was driven by a 44% increase in revenue from Ocado’s Technology Solutions division to £429 million, thanks to the addition of new customer fulfilment centres (CFCs) during the year. Meanwhile, Ocado Logistics revenue grew 1% to £680.5 million and Ocado Retail, Ocado’s premium online supermarket business, saw a 7% revenue increase to £2,408.8 million.
This topline growth filtered down to the bottom line, with the Group swinging to a positive adjusted EBITDA of £51.6 million, versus a £74.1 million loss last year. All three divisions were profitable, with Technology Solutions generating £15.4 million in EBITDA, Ocado Logistics £30.1 million, and Ocado Retail rebounding to a £10.4 million profit.
Improved profitability reflects lower operating costs, particularly for the Ocado Smart Platform direct costs which declined from 2.02% to 1.65% of installed sales capacity. Ocado also continued to tightly manage cash, reducing the underlying cash outflow by £356 million versus the prior year.
Ocado shares were 4.8% higher at the time of writing underscoring a well-received update.
“I am pleased to report good progress across the Group in 2023. Our technology is transforming the way people shop for food as we help some of the world’s best and most innovative retailers set the bar for excellence in grocery ecommerce worldwide. We opened three new state-of-the-art robotic CFCs; in Chiba city (near Tokyo) in Japan, Calgary in Canada, and Luton here in the UK and increased the amount of installed capacity for our clients by a quarter. We now have installed capacity at our retail partners for gross annual grocery sales of over £8bn,” said Tim Steiner, Chief Executive Officer, Ocado.
“Ocado Retail, our JV with M&S in the UK, has had significant success growing customer numbers, taking online grocery market share and rebuilding profitability, proving, once again, the attractions of our online model. Ocado Intelligent Automation, which brings our world-leading Automated Storage and Retrieval Systems (“ASRS”) technology, and the automation of warehouses to sectors outside of grocery, signed its first deal with pharmaceutical giant McKesson in Canada.”
