Ocado Solutions 16% growth – Group profits flat

In its year end financial report, Ocado said its Ocado Solutions segment has seen a 16% growth in business to £116 million in 2017. Profit growth for Ocado Group however, remained flat.

Chief executive Tim Steiner said: “The last twelve months have been transformational for Ocado. We have primed our Ocado Solutions business for growth and received an important validation of the business model through our latest partnerships with Groupe Casino and Sobeys. Looking ahead, we are confident that we will be able to do further deals with the momentum of new signings building over time.”

While Ocado Solutions is experiencing strong growth, the Group is still mainly a retail operation. The grocery delivery segment saw growth of 12.4% to £1.3bn. Its retail EBITDA was up 4.5% to £79 million.

Across the group, revenues were up 12.7% though EBITDA was flat at £84.3 million.

The Ocado grocery delivery segment is opening to new fulfilment centres. Steiner said: “We have ramped up capacity in our revolutionary CFC at Andover, which opened at the end of 2016, and prepared the way for the opening of our fourth CFC, in Erith, this year.

“Now is the time to take advantage of our growth opportunities. We will invest to ramp up our new solution in both Erith and Andover and to have the right resources in place to meet growing demand for the Ocado Solutions offer. We believe that taking advantage of these international opportunities now will make our virtuous cycle turn faster in the years ahead and we expect that to translate into higher returns on capital. We look forward to our future opportunities and challenges”.

While total order volumes grew 14.3% to 263,000 orders per week, average basket value fell slightly to £107.20. This is said to be due to the continued uptake of the Ocado Smart Pass, as well as an increase in use of mobile platforms for ordering – this results in customers ordering smaller baskets but more frequently.

Ocado is targeting retail growth of ten to 15 per cent over the coming year and says it aims to sign further international Ocado Solutions’ partners.