By James Davey
LONDON (Reuters) -Ocado’s priority is to generate cash in its next financial year, the high-spending British online supermarket and technology group said on Thursday, as it reported a 77% rise in first-half underlying earnings, sending its shares higher.
The group runs an online supermarket through a joint venture with Marks & Spencer, though its market value is mainly driven by the sale of its cutting-edge robotic warehouse technology to retailers around the world.
It said its core priority was to turn cash-flow positive during its 2025/26 year – which starts in December – by reducing costs, and to be full-year cash positive in the following year.
Finance chief Stephen Daintith told Reuters Ocado was “well on target” to achieve this, highlighting 93 million pound lower cash outflows in its first half to June 1 versus the previous corresponding period, a falling cost base, and a 15% increase in revenue in the key technology division.
Shares in Ocado were up 13%, paring 2025 losses to 12% that reflect market anxiety at the pace of new site openings for its grocery retail partners and a lack of new technology deals.
Ocado’s most important partner, Kroger in the United States, has slowed its roll-out of automated warehouses, or customer fulfilment centres (CFCs) as Ocado calls them, while last year its Canadian partner Sobeys paused the opening of a fourth warehouse.
Last month, Ocado did, however, expand its partnership with Spanish supermarket group Bon Preu.
Ocado has a further eight CFCs due to go live over the next three years.
CEO Tim Steiner said he expected to sign up new grocery clients as exclusivity terms with existing partners end in multiple markets towards the end of this year.
Bernstein analyst William Woods said this “may not be helpful to some of the long-term relationships or could be seen as a sign that the partnerships have deteriorated to a point where there is little chance of improvement”.
Ocado made first half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 91.8 million pounds, up from 52.0 million. Revenue rose 13.2% to 674 million pounds.
It swung to a statutory first half-profit of 611.8 million pounds versus a loss of 153.3 million pounds a year earlier, reflecting changes to the way it accounts for its stake in the Ocado Retail joint venture with M&S.
The group said its expectations for the full year were unchanged.
($1 = 0.7468 pounds)
(Reporting by James Davey. Editing by Paul Sandle, Mark Potter, Philippa Fletcher)
