Ocado Reports 2 Million Pound Profit

LONDON -- The shares of Ocado (LSE: OCDO  ) gained 6 pence, or 6%, to 110 pence during early London trade this morning after the online delivery service reported an adjusted annual pre-tax profit of 2 million pounds.

The performance appeared to beat the expectations of many City brokers, who had expected the FTSE 250 company to report a small loss for the 53 weeks to Dec. 2.

Ocado's profit was created after revenues gained 11% to 678 million pounds, which in turn was supported by average weekly order numbers improving 11% to 123,000.

The average delivery per van increased by 4% to 151 per week, although the average delivery value stayed the same at 112 pounds.

Other figures of note within today's statement included net debt of 55 million pounds and capital expenditure of 124 million pounds. Some 80 million pounds was spent during the year building the group's second warehouse and fulfillment facilities, which should open before the end of this month.

Tim Steiner, Ocado's chief executive, said:

We continued to achieve double digit sales growth during 2012 with increasing rates of sales and new customer momentum as we moved into 2013. This has been driven by further improvements to our core offer to customers -- better value, wider ranges and enhanced service.

Shopping online for groceries is clearly of increasing importance to consumers. In 2013, we will continue to improve the attractiveness of Ocado to customers and we shall substantially increase our capacity with the opening of our second fulfilment centre, creating over 1,000 jobs in the Midlands.

Ocado's 2 million pound profit compares to a current 676 million pound market value, so clearly there is some expectation that the group's second warehouse can advance sales further and create sizable economies of scale.

Alternatively, the market cap may reflect the potential of a bid.

The delivery service has recently been the center of takeover speculation, with Marks & Spencer in particular being a rumored bidder. Former Marks boss Sir Stuart Rose took on the role of chairman at Ocado last month.

Another possible predator is Wm Morrison Supermarkets, which does not have any significant online delivery service.

Of course, whether today's 2 million pound profit, the growth prospects for home grocery deliveries and the bid speculation now combine to make Ocado a "buy" remains your decision.

But if you already own Ocado shares, you may wish to read this exclusive in-depth report about a different growth opportunity among the FTSE's larger companies.

You see, the blue chip in question has lifted its earnings per share by 44% since 2009, owns subsidiaries that might carry "considerable value" not reflected within the shares -- and has just been declared "The Motley Fool's Top Growth Stock For 2013."

Just click here to download the report -- it's free.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2242130, ~/Articles/ArticleHandler.aspx, 10/22/2016 11:25:36 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 11:52 AM
OCDO $276.95 Up +0.45 +0.16%
Ocado Group CAPS Rating: No stars