Ocado

Monday, 13th March 2017 15:09 - by Rajan Dhall

Ocado is looking at robotics more than delivering groceries at the moment which is all well and good but in my opinion looks like an expensive exercise. This does not mean that it will not work out over all, but like any new product the r&d phase always has a significant cost. For this set of earnings to come out positive the company must show that it has set out provisions that the shareholders are happy with in order to move the product forward.

Another point that weighs on my mind is the Amazon - Morrisons tie up. When the deal was announced shares in Ocado fell 10% and now Morrisons is looking to expand the deal and provide a more efficient service in regards to order and delivery times. 

Last year the company made £12million profit on £1.3billion worth of sales, while debt climbed 30 per cent to £164.9million. With margins falling, net debt rising from £7.5m to £56.2m year-on-year and competition increasing. To me the financials dont make to much sense either. In this set of earnings they may lay out a plan to set things right but if not longer term I feel prices will remain pressured. 

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.