Ocado has developed a reputation for being all talk and no profit, and its latest full year results show a continuation of negative earnings at a group level.
To its credit, Ocado has made strategic progress over the past year. More customer fulfilment centres have been opened and its joint venture with Marks & Spencer is a major success.
Furthermore, it has developed new technology that will let customers go live on its systems quicker, at a lower cost, and potentially with better returns on the money spent.
“However, there are plenty of negative factors, with one standing out above all others. Covid showed that grocery companies have no choice but to build a state-of-the-art online ordering and fulfilment service, yet Ocado has yet to capitalise on this once in a lifetime opportunity by signing up a swathe of new customers,” said AJ Bell’s Russ Mould.
“Ocado needs to show off its capabilities, yet its track record has been blemished by two fires at its fulfilment centres in recent years after its robots collided, and an ongoing legal battle with AutoStore around alleged patent infringement.
“As we’ve seen in recent years, this is very much a waiting game. Years into the future, Ocado could be sitting pretty, lapping up a healthy stream of cash from partners using its technology. But for now, it’s all about spending to help set up operations and to make its technology as efficient and clever as possible. Its capital expenditure represents a big chunk of revenue, and it is growing fast, unlike its sales.
“Investors are getting tired of hanging around for the big earnings breakthrough and its share price has more than halved over the past 12 months.”