Don't let the results day rise in the share price fool you, it's still the same old story for Ocado (OCDO). Full-year results show that promotions and the company's Smart Pass scheme have garnered a 13.9 per cent rise in active customers (those who have shopped with it in the past 12 weeks), producing a 13.6 per cent rise in gross sales. But continued price deflation, coupled with input cost inflation and higher distribution costs continued to hurt operating margins, leaving statutory profits flat. Excluding what analysts have dubbed "real" costs such as an accelerated depreciation charge - one could add head office relocation costs there - pre-tax profits rose 22 per cent to £14.5m.
But analysts are growing increasingly frustrated at Ocado's inability to sign another customer contract. Chief executive Tim Steiner regurgitated the usual rhetoric about "ongoing negotiations", although investors might remember all Ocado managed in 2016 was a significant alteration to its existing contract with Morrisons (MRW). Despite the improvement in cash profits, net debt also moved up, from £127m to £165m, which prevented another year of dividend payments.
Analysts at Shore Capital have admitted there is scope to "materially cut" forecasts for the 2017 financial year, while Numis predicts pre-tax profits of £7.5m and EPS of 0.9p.
| OCADO (OCDO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 261.6p | MARKET VALUE: | £1.56bn | |
| TOUCH: | 261.6-261.8p | 12-MONTH HIGH: | 352p | LOW: 203p |
| DIVIDEND YIELD: | nil | PE RATIO: | 129 | |
| NET ASSET VALUE: | 44p* | NET DEBT: | 63% | |
| Year to 27 Nov | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.68 | -0.6 | -0.5 | nil |
| 2013 | 0.79 | -12.5 | -2.2 | nil |
| 2014 | 0.95 | 7.2 | 1.2 | nil |
| 2015 | 1.11 | 11.9 | 2.0 | nil |
| 2016 | 1.27 | 12.1 | 2.0 | nil |
| % change | +15 | +2 | - | - |
Ex-div: na Payment: na *Includes intangible assets of £79.7m, or 13p a share | ||||
