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(Alliance News) - Online grocer Ocado Group on Tuesday reported a slimmed half-year loss, as it unveiled a partnership with Auchan Retail to develop Alcampo's online business in Spain.
Auchan Retail, which has operations across 13 countries, operates the Alcampo brand in Spain via a network of 310 stores with revenue totalling EUR4.5 billion in 2020. There has been a significant acceleration in online grocery shopping during the pandemic, Ocado said, and the partnership will allow Alcampo meet growing demand for competitively priced, high quality grocery e-commerce.
Ocado and Alcampo will initially build a customer fulfilment centre to serve the Madrid region from 2024, with additional automated warehouses to be announced at future dates. The fee structure with Alcampo is similar to that agreed with other international Ocado Solutions partners.
Ocado and Auchan Retail will also explore the potential to extend their partnership into other geographies.
"The appetite for our unique end-to-end platform remains strong as retailers look to take advantage of the channel shift which is now redrawing the landscape of the global grocery market," said Chief Executive Tim Steiner.
Ocado said the Auchan deal will have a negligible financial impact on the current financial year, as fees will not be received until operations start in 2024. The deal will require minimal additional capital expenditure in the current year, but more in the 18 months just prior to the start of operations.
Separately, Ocado said group revenue for the half-year to May 30 was GBP1.32 billion, up 21% from GBP1.09 billion a year ago, while the online grocer's pretax loss slimmed to GBP23.6 million from GBP40.6 million.
Sales growth in the period was driven by strong demand for Ocado Retail - its joint venture with Marks & Spencer - and the increased popularity of online grocery shopping in response to Covid-19.
Though uncertainty remains over the performance of Ocado Retail in the second half of the year as pandemic restrictions ease, Ocado said it is encouraged by its performance in the second quarter which showed a strong increase in customer transactions offsetting a normalisation in average basket value.
However, it now expects a GBP30 million lower earnings before interest, taxes, depreciation and amortisation contribution between the International Solutions, UK Solutions & Logistics and Other segments.
"Overall, taking into account the encouraging performance of Ocado Retail, with these incremental investments and other impacts we are maintaining our full year outlook and do not expect a material change to consensus group Ebitda forecast," it said.
Ocado shares were up 1.4% early Tuesday. M&S was up 0.4%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.2% at 7,150.82
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Hang Seng: down 0.1% at 28,105.43
Nikkei 225: closed up 0.2% at 28,643.21
US Independence Day holiday observed. Financial markets closed on Monday.
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EUR: up at USD1.1890 (USD1.1865)
GBP: up at USD1.3888 (USD1.3851)
USD: unchanged at JPY110.83 (JPY110.84)
GOLD: up at USD1,805.31 per ounce (USD1,791.50)
OIL (Brent): up at USD77.48 a barrel (USD76.94)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
UK Office for Budget Responsibility's fiscal risks report
1100 CEST Germany ZEW indicator of economic sentiment
0930 BST UK construction purchasing manager's index
1100 BST Ireland industrial production and turnover
0945 EDT US services PMI
1000 EDT US ISM report on business services PMI
1000 EDT US employment trends index
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UK Prime Minister Boris Johnson's pledge to end nearly all of England's remaining coronavirus restrictions in one move despite cases rapidly rising has triggered a series of warnings. Labour criticised the PM's plan to gamble on public responsibility and the immunity from vaccines as "reckless" and called for him to maintain protections such as mask wearing. Shuttered business welcomed the opportunity to reopen but medics raised concerns of rising hospital admissions and charities representing the clinically vulnerable also warned of their heightened risk. Johnson accepted the pandemic is "very far from the end" as he said there could be 50,000 new cases detected daily by July 19 – the point he has signalled that restrictions will end. But he suggested it is this month or never to lift controls by taking advantage of the vaccine roll-out and the upcoming "natural firebreak" offered by the school holidays and good weather. Limits on social contact and the "one metre plus" rule on distancing will end at Step 4 of his plans to end lockdown restrictions and nightclubs will be permitted to reopen. People will no longer be instructed to work from home and the legal requirement to wear masks will end, though their use will be advised in "enclosed and crowded places".
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The Reserve Bank of Australia said the country's economic bounce is "stronger" than initially expected, though the central bank noted recent virus outbreaks present some uncertainty. The RBA announced another round of bond buying, adjusting the amount, and left its interest rate at 0.1%. When the current bond purchasing programme ends in early September, it will launch a new one until mid-November, at a rate of AUD4 billion a week, about USD3.02 billion.
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BROKER RATING CHANGES
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BARCLAYS RAISES NATWEST TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 250 (220) PENCE
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JEFFERIES CUTS LAND SECURITIES TO 'HOLD' ('BUY') - TARGET 725 (809) PENCE
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JEFFERIES CUTS BRITISH LAND CO TO 'HOLD' ('BUY') - TARGET 525 (617) PENCE
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BERNSTEIN CUTS RECKITT BENCKISER TO 'UNDERPERFORM' (MARKET-PERFORM) - TARGET 6000 (6400) PENCE
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COMPANIES - FTSE 100
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J Sainsbury raised its profit guidance following a strong start to its financial year, with grocery, general merchandise and clothing sales all topping internal expectations. First quarter like-for-like sales were up 1.6% on a year ago when stripping out fuel. Total sales were up 1.6% year-on-year and were 10% higher on a two-year basis. Grocery sales were up 0.8% year-on-year and 11% higher compared with two years ago. General merchandise sales were down 1.4% year-on-year and clothing sales jumped 58%. Sainbury's noted the lower general merchandise sales against last year's "elevated levels", but said this was still ahead of expectations. Sainsbury's said it is using some of the profit boost from its sales outperformance to drive investment plans, particularly to improve its value position, meaning lower prices. It also noted tough comparables ahead as lockdown restrictions continue to ease. Even so, it now expects to report underlying pretax profit of at least GBP660 million in the financial year to March 2022. Back in April, alongside the release of its annual results, Sainsbury's said it expected underlying pretax profit in the 2022 financial year to exceed the GBP586 million reported in the 2020 financial year, and was "comfortable" with consensus of around GBP620 million.
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AstraZeneca said its proposed takeover of Alexion Pharmaceuticals has received clearance from the European Commission. The pharmaceutical firm has received competition approvals in the US, Japan and other countries, though it is still awaiting clearance in the UK. "We continue to progress towards the completion of the acquisition during this quarter," said Chief Financial Officer Marc Dunoyer.
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COMPANIES - MAIN MARKET AND AIM
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Bridgepoint confirmed plans to float on the London Stock Exchange. The private equity firm - which was spun out of NatWest in 2000 - is looking to float at least a quarter of its shares to raise around GBP300 million from the IPO to fund growth plans, boost cash in its own funds, and pay down debts. It expects to be eligible for inclusion in FTSE indices.
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Among other planned IPOs, building materials distributor Lords Group said it plans to start trading on AIM on July 20. The London-based company was started in Gerrards Cross, Buckinghamshire 35 years ago. It has GBP288 million in revenue and hopes to achieve GBP500 million per year by 2024 by expanding nationally. Lords expects to raise GBP52.0 million in its IPO, with GBP30.0 million for the company and GBP22.0 million for selling shareholders. It will sell 54.7 million shares at 95 pence each, giving a GBP150 million market capitalisation. Lords said it is cash generative and expects to pay a regular dividend.
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COMPANIES - GLOBAL
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Westpac Banking said it has sold its New Zealand life insurance unit for NZD400 million, about USD283.6 million. Westpac said the sale, to Fidelity Life Assurance, is the latest measure in its aim to be a "simpler bank". Auckland-based Fidelity is one of New Zealand's largest life insurers. Westpac added the disposal will boost its common equity tier 1 capital ratio by seven basis points. "This transaction is the latest step in simplifying our business while continuing to help customers with their life insurance needs," Chief Executive Officer Peter King said. The unit had annual in-force premiums of NZD149 million as of the end of March, Westpac said.
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Tuesday's Shareholder Meetings
Assura PLC - AGM
Capital Gearing Trust PLC - AGM
JPMorgan Multi-Asset Growth & Income PLC - AGM
Marks & Spencer Group PLC - AGM
MaxCyte Inc - GM re dual listing on Nasdaq
N Brown PLC - AGM
Octopus Renewables Infrastructure Trust PLC - GM re proposed issue of ordinary shares
Predator Oil & Gas Holdings PLC - AGM
Templeton Emerging Markets Investment Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
