Pre-tax losses rise at online grocer Ocado after investment to beef up customer base
ONLINE grocer Ocado posted a 28.7pc rise in underlying first half earnings as it won new customers and increased their average spend, though it still made a loss at the pre-tax level.
Shares in the British merchant have risen nearly five-fold since November and hit a record high last month in the wake of a £200m (€230m) 25-year joint venture deal with Britain's fourth largest grocer, Wm Morrison, to provide its online grocery operation by January 2014.
Ocado, whose range includes products supplied by upmarket grocer Waitrose, said today that earnings before interest, tax, depreciation and amortisation (EBITDA) was £19.2m in the 24 weeks to May 19.
That compared to analysts' consensus forecast of £18.1m, according to a company poll, and was up from £14.9m in the same period last year.
However, the firm made a statutory pre-tax loss of £3.8m, versus a profit of £0.2m in the same period last year, due to the investment it has made in its infrastructure.
Ocado has not made an annual pre-tax profit since it was founded in 2000 by three former Goldman Sachs bankers.
Britain's traditional supermarkets are seeing little, if any, growth but its online grocery market is growing about 16pc a year.
Ocado's first half sales rose 15.2pc to £382.7m and the firm said it expected to continue to grow broadly in line with the market.
"We remain well placed to take advantage of the accelerating structural changes in the industry as more customers choose online delivery for their grocery shopping," said Chief Executive Tim Steiner.
Ocado has forecast the Morrison deal would deliver an annual profit contribution in the "mid-teens millions of pounds", while Morrisons' upfront payment of £170m would enable it to pay down £85m of debt.
Ocado shares closed Monday at 298.3 pence, valuing the business at £1.73bn.