News that Ocado has managed to hire a new chief financial officer wasn't enough to stop the online grocer's shares tumbling after its half-year results. It did manage to generate a small pre-tax profit, but the £181,000 was barely an improvement on a year earlier despite steadily rising sales, and trading in the third quarter has slowed markedly.
Ocado blamed the Jubilee for the slowdown, and suggested that the trend may continue during the Olympics – that's slightly odd, as larger grocers reported an improving sales trend in the Jubilee week and are confident of a similar uplift during the games. Management believes that improvement to the distribution centre and expansion of its grocery and non-food ranges will see sales growth recover in the rest of the second half. But increases in capacity are not translating into higher profit – average orders per week rose 13 per cent to 122,000, but higher distribution and marketing costs meant underlying operating profits slipped from £2.4 to £2m.
That hardly makes an encouraging case for the construction of a new distribution centre. Ocado says the first phase of the £200m facility is now 65 per cent complete but, having spent £71.4m on capital projects in the half, it only has £46.7m of undrawn borrowings remaining.
Broker Panmure Gordon expects a loss per share of 2.1p this year (from a loss of 0.5p in 2011).
OCADO GROUP (OCDO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 92p | MARKET VALUE: | £513m | |
| TOUCH: | 91-92p | 12-MONTH HIGH: | 200p | LOW: 52p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 31p | NET DEBT: | 41% | |
| Half-yearto 13 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 277 | 0.17 | 0.40 | nil |
| 2012 | 308 | 0.18 | 0.03 | nil |
| % change | +11 | +4 | - | - |
