Ocado says demand will be sustained

Citing industry data, Ocado said online grocery penetration across the UK almost doubled within a matter of months. But that trend wasn’t just limited to domestic consumers. In the States, monthly online grocery sales in late June were six times what they were at the end of last summer. China’s main grocery sites saw triple-digit year-on-year sales growth during the coronavirus outbreak.

The question now is whether such momentum can be sustained, with lockdown restrictions easing in several countries. And in Ocado’s view, the answer is a resounding ‘yes’. Nearly a third of UK survey respondents said they would order more of their groceries online post-pandemic. In the US, the equivalent figure was 90 per cent. Little wonder, perhaps, that the group reckons we will ultimately see a “permanent redrawing of the landscape of the grocery industry worldwide” – one which will only serve to make its technology capabilities, known collectively as the ‘Ocado Smart Platform’, more relevant.

The overseas expansion of Ocado’s tech offering is already gathering speed. Fees invoiced to ‘international solutions’ partners soared by 58 per cent during the first half, to £73.7m. And, notwithstanding the disruption bred by the new coronavirus, operations kicked off at Ocado’s first two international customer fulfilment centres (CFCs) in Toronto and Paris.

That said, ongoing international investment plunged this part of the business even further into the red – from cash losses of £23.7m to cash losses of £45.1m. This contributed to a 35 per cent contraction in overall adjusted cash profits to £19.8m, while the group remained lossmaking on a reported basis.

Broker Numis expects an adjusted loss per share of 26.6p for FY2020 – better than the 16.8p loss reported for FY2019.