Ocado warns on 2022 earnings as investment weighs

  • 2021 core earnings fall 12.1%
  • Warns 2022 core earnings won't meet market expectations
  • Capex to rise to around 800 mln stg in 2022
  • Says has encouraging pipeline for new deals
  • Shares down 9.2%

LONDON, Feb 8 (Reuters) - Ocado Group (OCDO.L), the British online supermarket and technology firm, warned core earnings in 2022 would undershoot market expectations as it steps up investment in automated warehouses around the world, hammering its shares.

The stock was down 9.2% at 1051 GMT on Tuesday, extending losses over the last year to 53%, which also reflect investor concerns over ongoing litigation with Norwegian rival AutoStore (AUTO.OL).

Ocado reported a 12.1% fall in earnings before interest, tax, depreciation and amortisation (EBITDA) to 61.0 million pounds for its year to Nov. 28 as investment in the business more than offset an increase in revenue.

The outcome was a touch above analysts' average forecast of 60 million pounds.

They had on average been expecting EBITDA to rebound to 92 million pounds in 2022.

However, Ocado's finance chief Stephen Daintith told reporters the group was planning 30 million pounds more investment in its International Solutions technology business in 2022 than the market had anticipated.

"That would imply therefore a 30 million pound lower EBITDA for that segment in 2022 than current consensus and therefore a similar lower level for the group number," he said.

Ocado forecast flat EBITDA for International Solutions in 2022, with a 50% increase in the UK technology business.

Investment in 2022 will support the launch of nine automated warehouses as well as technology development.

"Bots" are seen on the grid of the "smart platform" at the Ocado CFC (Customer Fulfilment Centre) in Andover, Britain May 1, 2018. REUTERS/Peter Nicholls

Ocado has already struck partnership deals to provide its technology to supermarket groups in eight countries, including Kroger (KR.N) in the United States, Aeon (8267.T) in Japan, Casino in France and Coles (COL.AX) in Australia.

It has an "encouraging" pipeline for new deals and was in talks with a number of retailers, it said.

Last week, Ocado unveiled a suite of technological innovations from lightweight robots to hi-tech van routing systems which it predicted would raise its returns and win new customers. read more

"I can't understate the importance of these initiatives to us, our partners and to the future of the grocery market worldwide," CEO Tim Steiner told reporters.

Ocado's pretax loss widened in 2021 to 176.9 million pounds, while revenue rose 7.2% to 2.5 billion pounds.

Capital expenditure increased to 680.4 million pounds and was forecast to rise to 800 million pounds in 2022 as more sites go live and others are ramped up.

The group forecast the Ocado Retail business, a joint venture between Ocado Group and Marks & Spencer (MKS.L), would return to "mid-teens" revenue growth in 2022, after growth of 4.6% in 2021. read more

($1 = 0.7393 pounds)

(The story was refiled to remove extraneous words in paragraph 14)

Reporting by James Davey; Editing by Kate Holton, Louise Heavens and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.