LONDON (Reuters) - British online supermarket and technology group Ocado said it would buy two robotics companies for a total of $287 million and upgraded its full year earnings outlook on the back of strong trading at its retail joint venture with Marks & Spencer.
Ocado said on Monday it was buying Kindred Systems Inc, an advanced piece-picking robotics company, for about $262 million and Haddington Dynamics Inc, a robotic-arm designer and
manufacturer, for about $25 million.
Although Ocado has only a 1.8% share of Britain’s grocery market, its state-of-the-art technology for robotically operated warehouses has spawned partnerships with supermarket chains around the world, underpinning a stock market valuation of more than 17 billion pounds ($22 billion).
Ocado, whose shares were up 9.3% at 0941 GMT, said the purchases would enhance its robotic capabilities and accelerate the commercial delivery of robotic picking for its clients.
They also provide an opportunity for Ocado to enter new markets for robotic solutions outside of grocery
“That is demonstrated by Kindred Systems’ robust growth, with existing customers such as Gap and American Eagle across the general merchandise and logistics sectors,” said Ocado CEO Tim Steiner.
The transactions will have no financial impact in the current year, Ocado said. It forecast they would increase 2021 revenue by about 30 million pounds with a small negative impact on EBITDA (earnings before interest, tax, depreciation and amortisation).
Ocado also upgraded its full-year 2020 core earnings outlook due to strong fourth quarter trading so far at Ocado Retail Ltd, its joint venture with Marks & Spencer.
It expects full year EBITDA to be over 60 million pounds, versus previous guidance of more than 40 million pounds.
“Ocado continues to see high demand as consumers migrate to online grocery in record numbers,” it said.
($1 = 0.7751 pounds)
Reporting by James Davey; Editing by Louise Heavens, Paul Sandle and Alexander Smith
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