29 February 2024
If you are covering Ocado’s 2023 results, please find comments below from Chris Beckett, head of equity research at Quilter Cheviot:
“Ocado Group, the online grocery and technology company, reported strong results for the full year 2023, beating market expectations, with the technology solutions segment reporting a 44% increase in revenue. However, Ocado also faced some challenges and headwinds in 2023, such as the absence of new orders for automated warehouses (customer fulfilment centres) for its largest partner, Kroger, in the USA as it strives to improve returns from existing sites and management are distracted by the proposed merger with Albertsons.
“The company also secured a smaller and lower quality tech contract with Tamimi Markets in Saudi Arabia, which will use Ocado’s manual picking technology rather than its robotic solutions. Ocado said these contracts reflect the diversity of its offering and the opportunity to serve different markets and customer needs.
“Looking ahead, Ocado said it expects its technology solutions revenue to grow by 15-20% in 2024, which is lower than the 44% growth achieved in 2023. Ocado also said it expects its UK retail business to deliver a high mid-single-digit margin in the medium term, which is higher than most bricks and mortar retailers, demonstrating the potential of its automation and efficiency.”
