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Ocado profits held back by investment costs

Online grocery retailer Ocado has seen its half-year pre-tax profits fall by 9.4% to £7.7 million following investment in its infrastructure and growth initiatives.

FOOD & DRINK

Ocado profits held back by investment costs

Online grocery retailer Ocado has seen its half-year pre-tax profits fall by 9.4% to £7.7 million following investment in its infrastructure and growth initiatives.

In the 26 weeks to 28 May, retail revenue increased by 12.5% to £659.6 million while EBITDA rose by 2.7% to £45.2 million.

The company said growth in retail revenue was driven by improvements in the number of active customers in the period and higher order frequency.

However, profitability was impacted by continuing inflationary pressures, higher costs associated with the opening of its Andover customer fulfilment centre, and the company’s continued investment in future growth initiatives.

Ocado said it expects its capital expenditure in 2017 to be around £175 million. This will include expenditure for its Andover and Erith customer fulfilment centres and increased costs for developing infrastructure and technology solutions.

During the period Ocado grew its number of active customers by 12.7% year-on-year to over 600,000. In addition, order volumes rose by 15.6% to an average of 260,000 orders per week, with the highest number of orders delivered in a week reaching 280,000.

Tim Steiner, chief executive of Ocado, said: "I am pleased to announce another period of consistent customer, revenue and order growth, as well as improved operating efficiencies within our UK retail business.

"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.”

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