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(Alliance News) - Ocado Group PLC on Thursday reported a widened interim loss and a decline in revenue, which it put down to a UK grocery market that "contracted post pandemic and the rising cost of living crisis in UK".
But the online grocer and warehouse technology provider also reported a strong liquidity position and said no additional financing will be needed as the business becomes cash flow position.
Ocado shares were flat at 774.60 pence each on Thursday morning in London.
Revenue in the six months to May 29 fell 4.4% to GBP1.26 billion from GBP1.32 billion a year earlier. Ocado's pretax loss ballooned to GBP211.3 million from GBP27.9 million.
Hitting its bottom line was depreciation, amortisation and impairment losses, which rose 51% to GBP157.3 million. Distribution & administrative costs rose 16% to GB546.7 million, in part due to inflationary pressures on fuel and labour.
"The significant increase in cost of living is having a significant impact on customer behaviour and will be an ongoing challenge for the remainder of the year," Ocado warned.
It reported a loss before interest, tax, depreciation and amortisation of GBP13.6 million during the period, compared to a profit of GBP61.0 million a year before. This was due to a reduction in retail Ebitda to GBP31.3 million, down 73% from GBP104.1 million, reflecting lower volumes and the inflationary environment.
On a more positive note, Ocado has said its medium-term financing needs are met following a near GBP580 million cash raise to expedite growth plans amid surging online grocery demand during the Covid-19 pandemic. Ocado has "ample liquidity", it said.
Total liquidity stands at around GBP2.0 billion, it said.
Chief Executive Officer Tim Steiner said: "Following our recent successful financing, we now have a strong financial position and ample liquidity to fund the requirements of our existing and expected customer commitments into the mid-term. No additional group financing will be needed as the business becomes cash flow positive. With these building blocks in place, notwithstanding the near-term challenges for the consumer in the UK, we look forward to the future with confidence."
On Tuesday, the company had said the chief executive of its retail joint-venture with Marks & Spencer Group PLC will step down from the role. Melanie Smith will leave the business at the end of next month. She has led the joint-venture since its formation back in August 2019. Lawrence Hene, Ocado Group's chief product officer, will take on the role of interim CEO of the joint-venture.
Ocado declared no interim dividend, unchanged from a year ago.
Looking ahead, the group said total expenditure is expected to be around GBP800 million driven by the accelerating roll out of Ocado Smart Platform worldwide. It anticipates the retail Ebitda margin to recover to high mid-single digit in mid-term.
By Xindi Wei; xindiwei@alliancenews.com
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