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UPDATE 1-UK's Ocado swings to first-half profit
July 1, 2014 / 6:30 AM / in 3 years

UPDATE 1-UK's Ocado swings to first-half profit

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LONDON, July 1 (Reuters) - British online grocer Ocado swung to a first-half profit on Tuesday, putting the firm on track to make its first annual pretax profit this year.

The firm also said on Tuesday it has secured a site for a third distribution centre, with works due to start in the second half of 2014, subject to planning approval.

It will be a smaller design than its two existing customer fulfillment centres (CFC) and will be for Ocado’s sole use.

The group, whose range includes products supplied by upmarket grocer Waitrose, said it made a profit before tax and one off items of 7.5 million pounds ($12.8 million) in the 24 weeks to May 18.

That compares to a loss of 1.0 million pounds in the same period last year

Gross sales rose 15.6 percent to 442.4 million pounds, having been up 18 percent in the first quarter.

The company has not made an annual pretax profit since it was founded in 2000 but analysts have been forecasting one of about 16 million pounds for its 2013-14 year.

Britain’s traditional supermarkets are seeing little, if any, growth in sales at their big stores but the online grocery market is growing strongly.

Though Ocado’s share price is down 16 percent over the last six months it is still up 24 percent over the last year, mainly on the back of a 200 million pounds deal with Morrisons, Britain’s No. 4 grocer, to provide its online grocery operation and on hopes it could do similar deals overseas.

The UK online grocery market is currently worth 6.5 billion pounds a year, according to data from IGD, the industry group. It forecasts the market will more than double over the next five years.

In the first half Ocado’s active customers increased to 396,000 from 360,000, though average basket size dipped slightly to 114.43 pounds from 114.90 pounds.

Ocado said the service successfully launched in January and is ramping up smoothly.

Shares in Ocado closed Monday at 371.3 pence, valuing the business at 2.16 billion pounds. ($1 = 0.5877 British Pounds) (Reporting by James Davey; editing by Kate Holton and Paul Sandle)

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