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I've started buying some shares. I think we'll see some upside soon.
Ocado made operational profits of 54.2m last year. The 403m pre-tax loss you may be talking about includes 405m of depreciation, amortisation and impairment, which would include software and hardware development capex spent in previous years that is split over a period to offset tax.
I'm really stuggling to make a decision on the price action. I'm somehow feeling the upside is starting to become more likely, but the indicators I use are very mixed. I'm a quite impulsive person so I have to be very careful with these situations. The right thing to do, is to wait, but I always imagine that I can catch a sharper bottom or that I'll miss out on some of the upside when it turns (if it turns). As I said I've started entering long positions on my 'canary' account and I've added this morning. I've been close to buying shares, although fewer than previously
I'm going to struggle to resist for much longer
Kroger actually has a new spoke opening in May 24, but let's just ignore that as it doesn't fit with our agenda.
VP, did you copy and paste that from your post the other day?
They seem very similar.
Losses stem from ongoing investment in R&D.
One of the partners who have paused new CFCs is Ocado Retail, which is part of the group so they are pausing paying development fees to themselves.
They are now back over 75% capacity at the existing sites.
Kroger closed spokes they set up and ran themselves. Nothing to do with Ocado as they run the CFCs and managing delivery operations is Kroger's responsibility. The modules at the CFCs will have been drawn down and still have to be paid for by Kroger.
The Walmart article you quote is not representative of the full range of investments Walmart has made across their business in automation. They have invested in and partnered with a number of leading automation companies like Symbotic.
My original point was what are the big UK supermarkets doing to automate in contrast to the likes of the US, Germany, Japan and Korea.
Ocado probably prefer to describe themselves as a tech company as calling themselves a robotics company is probably too narrow. It doesn't really account for their own software packages that they have developed etc
And automation is probably a much better word to use than robotics.
But by keep analysing them as if they were a pure play online supermarket and applying a valuation multiple in line with Tesco's rather than say Amazon's doesn't do anyone any favours.
£394 mill of losses in the recent Ocado group year end results.
The market will stomach the losses whilst new contracts are being regularly signed. However when the new deals slow then the spotlight focuses on any issues within the company. Currently existing 2 main partners have paused commissioning new CFCs. Theres a costly large overcapacity at Ocado retail caused by overoptimistic expansion. Spokes at Kroger closing. Not an issue for some on this board. A clear red flag for me and others.
Whilst there are no new contracts signed and existing partners are pausing ordering further CFCs then the downwards pressure on the share price continues.
Should get closer to £500m on Solutions for 2024 as 15-20% growth forecast on 2023 figure of £420m.
Some £360m of that was from recurring revenue as in the fees and cut of sales from existing CFCs.
Worth noting Boyo how Walmart have filed a few more patents for robots than Ocado:
Ocado may not have used the word ‘robot’ as much in patents because some of them may have wider application.
Walmart’s robots (supplied by Brain Corp) were more like Daleks and weren’t a great success:
https://retailwire.com/discussion/walmart-inventory-bots-flopped-will-sams-succeed/#:~:text=In%20November%20of%202020%2C%20Walmart,the%20employees%20working%20the%20shelves.
On its website, Ocado Group defines itself as: A global, technology business redefining ecommerce, fulfilment and logistics in online grocery and beyond.
Robotics isn’t mentioned in this defining sentence, https://www.ocadogroup.com/our-business/about-us/
As shareholders, we must currently accept that the Group’s financial statements don’t reflect that image, with Technology only providing around 15% of Group Revenue but a healthy 30% of profits. An analysis of the Group as a whole inevitably involves the Retail and Logistics segments and some analysts will do a better job than others. Anyone who focuses on the declared Loss figure without grasping that it reflects amortised development costs rather than a cash outflow will be getting the wrong impression - it’s a mistake that I’ve previously made.
Agreed and it's the likes of Clive Black driving UK companies stateside.
It's not as though the tech investment isn't showing decent revenues (over £400m forecast for 24), the UK commentators have zero understanding or patience with tech, hence why more are listing elsewhere
"If anyone can make the SP £29 I’ll be very happy - I would be delighted to give them the bonus"
Share price performance is one thing. However, I think such a bonus should only be rewarded when the company is making big net income profits and generating lots of cash in excess of it's operating costs. As I have mentioned in previous posts, I fear that if Ocado fails to finally make a profit within the next two years it will run out of money.
One of the reasons ARM chose to relist on the US market rather than the UK one was the greater depth of knowledge and understanding of it's business they would get from US analysts. No doubt they anticipated the sneering comments they would get from the likes of Clive Black complaining about "enormous losses" whilst making ongoing investment in R&D.
I mean with Ocado is it really that surprising that a high tech robotics company needs to keep reinvesting to stay ahead in an industry with incredibly fast moving developments in new technology?
FT article on the AGM quotes Clive Black from Shore Capital to complain about the incentive scheme.
All well and good but again Clive is very clearly an analyst specialising in supermarkets, with many news items quoting him on the likes of M&S, Aldi and the rest.
Don't think his understanding of building a high growth tech business from scratch will be that great. It would be interesting to know if he could answer fairly basic questions about the Solutions business.
If anyone can make the SP £29 I’ll be very happy - I would be delighted to give them the bonus - at least we know someone is gonna be pulling out the stops to make that happen - thank phuc
Automation is inevitable
I should say .. "more" automation seems inevitable .... and competition is so strong that cutting costs and increasing efficiency is a "must-have" these days
AI forecasting tools are becoming a "must-have" too
Sang
Automation is inevitable ...customers have ever increasing expectations, and labour is getting more and more expensive and arguably less productive ...and yes...retirement of Boomers and falling birth rates ...adds to the inevitable situation
Oh yes I am. Just look at all the air-con needed.
It would take a continent full of PDP8's to come close to that processing power: that would look impressive but size isn't everything.
Software and platforms have improved massively but how much of that core tech did Amazon create and build from scratch? Or are the hardware and operating systems essentially off-the shelf?
But OCDO needed to develop proprietary hardware and software unique to their tech product. Who has a Blackberry these days? Amazon have never attempted to be unique . Universality usually wins unless it's really bad. But don't talk to me about Apple - persisting with something non-standard but technically simple to use in a mass market, ties people to your product and, if you keep it fashionable, you can charge what you like and they'll feel obliged to buy a new one every couple of years because it's hard for them to change.
Agreed 100%. I am not bothered in the least about the SP at the moment.
The investments made in tech by the likes of Walmart and Kroger/Ocado makes you wonder what the likes of Sainsbury's and Tesco have been up to.
It looks like Sainsbury's are now going to belatedly make more investment in automation at their warehouses.
I wonder if there is any scope for one of the other supermarkets to pay Ocado Retail to add their product lines?
That seems to be what the partnership with Groupe Casino is looking to achieve. Rent CFC capacity to other French retailers.
Also wonder that maybe Ocado can afford to play tough with M&S because they could swap them out for Sainsbury's or Tesco.
We do have one of the lowest birthday rates and that's one of the reasons why Korea has such a highest number of robots to humans ratio in the world.
The UK has relied instead on cheap labour rather than investment in technology. This could come back to bite the likes of Sainsbury's in future.
Sang
If indeed Ocado has a very bright future mid-term onwards ...then.... it actually makes sense shorting now and bringing down the share price ..in the mean time....... so...as to take maximum advantage of that medium-term belief
( like a bow and arrow, first pull back the bow !!)
" For me it’s virtually a coin flip as to whether it will fall further in the next few days "
Maybe the FED meeting and Powell statement will have some influence on that !! ..I dare say it might !
The chart here from Global Data gives an idea of where Ocado stands as a robotics company. The analysis is based on the number of patients filed, what applications they cover and what countries filed in. Worth noting that Myrmex, to the left of Ocado on the chart was bought by them in 2022 so they can really be bumped along to a higher score on the right.
The data goes up to 2021 I believe and they will have filed a lot more since then.
Worth noting Boyo how Walmart have filed a few more patents for robots than Ocado, while running a profitable grocery business.
https://www.retail-insight-network.com/data-insights/innovators-robotics-automated-inventory-management-retail/?cf-view&cf-closed
Yes indeed Pokerchips. Why vote when you've got a big chunk of your capital at risk and invested here when you can be tuning in to this board.
AGM’s are boring aren’t they - and probably just as well this time around. The sp really perked up after 15.15 in a way that the daily chart doesn’t capture https://invst.ly/14li7j However, only a fool would look at OCDO’s LT daily chart https://invst.ly/14lhuz and suggest it looks positive, despite some massive volumes traded recently. The trends up to this afternoon's kick are undeniably pointing to a further fall although support at nominal 342 (which includes a brief intraday low of 335) has so far held. Until and unless it breaks, that support marks the bottom - just like last year, although it did bounce more convincingly then. For me it’s virtually a coin flip as to whether it will fall further in the next few days and, whatever your gut instincts are as a PI, betting the farm on it or arguing the toss here won’t improve those odds much. If it does stay above 342 then the next test will be when it meets the lower red trend in the daily chart later in May. That’s a chat for another day. GLA
Are you aware of the scale of the data centres Amazon employ for their cloud computing business?
https://aws.amazon.com/compliance/data-center/data-centers/
Sangijuelas: That's a really good question but, on reflection I think you’ve helped make my point. My immediate answer would be that Bezos saw the power of tech when he started selling the simple merch of books (which didn’t need massive warehouses at first and was a much simpler product to move and shift than groceries (which they still can't do really). The other stuff (making books, music and video into easily managed and delivered data files) came later and was built on basic and established IT formats and systems. Nothing particularly challenging in technology terms, with people doing the logistics associated with stuff that actually couldn’t be delivered over the internet. Was Warehouse automation ever one of Amazon’s main goals? Amazon is primarily built on mainstream operating systems, programming codes, file formats and services and the rest has been either outsourced or is run by locally set-up warehouse and logistics teams with a strong but fairly conventional and flexible IT corporate network binding it all together.
Bezos was too smart to get drawn into stuff that required complex mechanical infrastructure, manufacturing, testing and client support . It was all simple technically - which is why he needed to build a rocket.
Bit like any shareholder vote, general election, brexit etc etc....if you do not vote you are irrelevant. The result can only be based on who votes.