Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
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This article mentions how Autostore had to add warehouse automation as a service instead of trying to keep billing up front due to demands by their customers.
https://www.nanalyze.com/2024/03/autostore-revenue-growth-slows/
" if the M&S dispute is not resolved sensibly"
well they are both essentially batting for the same team ....so... "sensibly" seems a more likely outcome ....
So not necessarily something that might impact other collaborations that are in place. I assume, if there are clauses that look shaky after the M&S dispute, they'll be tightened up for future collaborations. That sounds reassuring so like the best of fools I'll run with that view (confirmation bias at it's most obvious).
The M&S dispute arise from extraordinary circumstances due to COVID. Targets were missed because capacity was cranked up but Ocado say that they agreed the increased capacity with Marks, which should be taken into account when assessing the targets missing
From the transcript CFO Daintith (ex Rolls Royce funnily enough) was asked if they had thought of passing capex costs to customers and said had been considered but they decided to stick with current business model. Apparently partners do put up a third of initial capex so some of the liability would be for that as well. For example, Coles and other sites under construction.
But is this similar to the performance related dispute with M&S. If it is, it could easily explain the slide in SP and if the M&S dispute is not resolved sensibly, it would be a very bad signal for the future. If that's right (and maybe I'm misinterpreting) then the M&S dispute is the canary in the mine.
Sangijuelas1
that would be interesting if so..
a whopping £400m+ waiting to transfer over from liability to revenue ....hummm that is similar to the Rolls Royce account ...the NAV always looks far worse than it actually is because a whopping liability is actually revenue, waiting in the wings to move over in the books ...
Also suggests a lot of costs have been paid out which affects the profit margin unfairly...given the revenue from the costs incurred isnt there to balance the actual Reported margin
So while investors fret about Kroger closing spokes in Florida they could be drawing down modules elsewhere
Looking at the transcript of the last investor call I think those contract liabilities are where sites have been completed but not all the available modules have been drawn down.
So a CFC site built and paid for 5 modules of capacity is only using 3 so until the other 2 modules are drawn down they don't get to count it as revenue.
Which explains why they are so focused on working with partners to get the additional modules drawn down.
" Part of the reason was limited Kroger brand awareness in those areas"
yes ....but read ValuePlay and he will try and tell you that it is the end of the world for Kruger and Ocado ...despite the fact there are still a number of CFC commitments still out there for Kruger and Ocado ...
be careful what you read is my advice
I agree completely over the spokes closure. They tried to use capacity at an existing CFC to extend their reach. It didn't work so they scrapped it.
Part of the reason was limited Kroger brand awareness in those areas and their marketing efforts didn't bring in enough orders.
" if Kroger did want to build out more Ocado"
The thing to remember about Kroger is that they already have a contract to build a set number of CFCs ... of which only a few have been completed...it is a long , on going contract ...with Kruger apparently picking sites in the New York State area for their next locations ..so I read
so..in effect Kroger has more than enough in its current contract without even having to think about " build out more"
The closure of 3 spokes is small fry when one is able to stand back at view the bigger picture
Kruger has annual revenue in 2023 of $1.8 TRILLION and people are panicking over the closure of 3 spokes
Valueplay seems obsessed over 3 spokes yet keen to ignore these bigger picture commitments
"such as the new Hatfield site etc"
sorry ..I mean the Luton site
Valueplay
part of the fund raise is to fund their own CFCs for Ocado Retail such as the new Hatfield site etc ..plus R&D ..for the advancements of the technology of course
Ocado Solutions business model is to offer a warehouse automation platform as a service. So they get some upfront payments as an incentive/contribution and then build and run the warehouse using the platform.
Doing this upfront and then getting a percentage of future sales that are in the billions plus platform use fees is lucrative once they have the right number of CFCs up and running.
That's why if Kroger did want to build out more Ocado would probably need more cash but that would be seen as a major positive in terms of moving them into strong profitability.
Valueplay
I would be interested to clarify the issue of CFC Customers ....
The books have Contract liabilities of £446.7m (FY22: £422.9m) which is stated as
" primarily relate to the consideration received in advance from Technology Solutions and OIA customers."
" Revenue is recognised when the performance obligation is satisfied, typically when a site goes live or OIA products and services are provided. "
so...my understanding .....rightly or wrongly from the wording of "received in advance" indicates that the customers pay Ocado in advance , but it is a liability until Ocado actually achieves the obligation
Ocado have spent cash to achieve the "performance obligation" which is shown as CAPEX spend .....but... they dont remove the liability from the account and add it to revenue until the site goes live ...
Ocado does invoice for design aspects and that moves off the liabilities and onto revenue when the client shows satisfaction and signs the invoice document
so.... in affect ..Ocado are achieving more than the accounts suggest at this stage .... because the revenues of obligations complete have yet to be received as revenue...on the books
If you look at the RNS for example regarding McKesson Canada ( 15/11/2023) it states " Ocado will receive upfront fees during the construction process with the final payment upon final installation"
The media is not benign, I watch that kind of thing closely.
@Valueplay: That isn't the CFC funding model for Kroger is it?
Atleast 3 points in a trend line must touch ,sm use bodies sm use wicks ...but that way u will get the best results
Phoenixy: Whilst I think it's found some support there's no evidence of a reversal as yet IMO. Yesterday's candle appears to contain a data error - the day's low is given as 3.48 so I assume the decimal point is in the wrong place for a 348 entry. I think the actual low was 335.
Ah yes, the trend lines on smaller tf are pretty much invalid ,usually use daily and weekly ,smaller tf best to use ema's to trade...
That's a 15 minute chart msuk.
Up in top left next to OCDO, the number 15 gives the TF.
I almost always post either a 15 minute (trading TF) or a conventional daily chart.
Media narrative is great for sp manipulation isn't it.
#bayo ,what time frame is that chart ?