27 February 2025
If you are covering Ocado’s full year 2024 results, please find comments below from Lucy Rumbold, equity research analyst at Quilter Cheviot:
"Ocado's full year results for 2024 were slightly better than expected. The group saw a 14% increase in total sales, primarily driven by its key technology solutions division which experienced an 18.1% rise due to three new customer fulfilment centres (CFCs) going live during the year. Despite the positive results, Ocado has released weak guidance for FY25 module run rate, implying another delay of two CFCs. This has weighed on investor sentiment due to the rollout of CFC and modules being the key attribute to improving profitability which has caused the stock to open 8% lower today.
“Ocado’s significant growth in earnings (EBITDAR), up fivefold from £15.4 million to £80.9 million, has led to a higher margin of 16%. This was anticipated as it reflects the maturing of the business and the increased profitability due to its warehouses being a year older.
“The primary driver of revenue growth has been the rollout of CFCs, with seven more in the pipeline set to go live over the next three years. However, no new contracts have been announced, which would be crucial for enhancing Ocado’s investment case.
“Ocado has guided its technology solutions revenue to grow by 10%, a slowdown from this year, but its earnings margin targeted to 20-25%, reflecting its commitment to improving operating efficiency. Additionally, Ocado remains on track to turn cash flow positive in 2026 and are actively pursuing new deals with multiple 'live' discussions ongoing."
