LONDON MARKET OPEN: Investors Shrug Off Big Interim Loss For Ocado

(Alliance News) - Stocks in London opened lower on Tuesday, with investors awaiting Congressional testimony by US Federal Reserve Chair Jerome Powell, while investors turned a blind eye to a widened pretax loss for Ocado, backing its transition from online grocer to food-delivery technology provider.The FTSE 100 was down 10.46 points, or 0.1%, at 7,538.81. The FTSE 250 was down 43.94 points, or 0.2%, at 19,537.53. The AIM All-Share was up 1.70 points at 909.38.The Cboe UK 100 index was down 0.2% at 12,781.06. The Cboe UK 250 was down 0.2% at 17,465.34, and the Cboe UK Small Companies was flat at 11,281.61.In mainland Europe, the CAC 40 index in Paris and DAX 30 in Frankfurt were down 0.2% and 0.5% respectively in morning trade.In the FTSE 100, Ocado was the best performer, up 1.7% after the online grocer said it continues to experience healthy sales growth amid "strong" demand, despite posting a big interim loss.For the six months ended June 3, Ocado's pretax loss widened dramatically to GBP142.8 million from just GBP13.6 million a year prior. This was despite revenue rising 11% to GBP882.3 million from GBP795.3 million, as retail revenue grew 10% to GBP811.5 million from GBP736.6 million.Profit performance was primarily hurt by GBP100.6 million in exceptional administrative costs during the period. This was largely the write down of property, plant and equipment following a fire at Ocado's Andover warehouse.Adjusted pretax loss, excluding such one-off costs, still worsened to GBP43.0 million from GBP12.9 million the year before. Ocado retained its current second half guidance. The firm expects retail revenue to rise between 10% and 15% despite the Andover fire amid "strong" underlying demand. The firm does expect a GBP15 million impact on profit from further Andover-related business disruption. Ocado does not pay a dividend. "The nature of Ocado's growth plans carry execution risk as each deal is implemented, while capital expenditure remains high and estimated at GBP350 million in the immediate future. Meanwhile, from an investment perspective, the lack of a dividend converts the stock into a pure growth story although, for the most part, this has been a rewarding experience," Interactive Investor's Richard Hunter said. "The company notes that it now has eight global partners, including latterly Coles of Australia and that it is engaged with 'multiple' retailers in driving the business further forward. In the meantime, despite the headline loss, group revenues increased by almost 11% in the period, the initial signs for the (one hour delivery) 'Zoom' service are promising and the underlying 'Smart Platform' should continue to attract retailers globally looking for an edge using Ocado's state-of-the-art systems," Hunter added. At the other end of the large cap index, Just Eat was down 3.2% after Berenberg downgraded the online takeaway ordering platform to Hold from Buy. Micro Focus International was down 2.5% despite the Newbury-based software firm saying its half-year revenue performance was in line with guidance and its full-year guidance was maintained.For the half year ended April 30, revenue came in at USD1.66 billion, down 7.5% from USD1.79 billion the year before. Profit for the period after tax surged to USD1.40 billion from USD619.7 million the year before, following the sale of its SUSE software business to EQT Partners. The company said the SUSE separation and disposal was delivered on schedule resulting in a USD1.7 billion profit on disposal and USD1.8 billion returned to shareholders. From continuing operations, Micro Focus posted a pretax loss USD99.6 million, in line with the USD100.9 million loss the year before.Micro Focus reiterated its guidance for constant currency revenue change for the 12 months to October 31 of minus 4% to minus 6%.The stock remains 57% higher so far in 2019. In the FTSE 250, Drax Group was the best performer, up 2.2% after Credit Suisse raised the electricity generator to Neutral from Underperform. At the other end of the midcap index, RHI Magnesita was the worst performer, down 3.5% at 4,750.00 pence after GP Investments sold 2.2 million shares in the refractory products firm at 4,600p each. GP Investments will continue to hold a 4.36% stake in RHI Magnesita.easyJet was down 2.8% after ODDO BHF downgraded the budget airline to Reduce from Neutral. The Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong is down 0.7%.Fed chief Powell speaks in Boston at 1345 BST on Tuesday ahead of his highly anticipated two-day testimony on Capitol Hill starting on Wednesday. The pound was quoted at USD1.2485 early Tuesday, down against USD1.2508 at the London equities close Monday.Milder weather conditions led to the worst June on record for UK sales as retailers struggled to compete with last year's performance, the British Retail Consortium-KPMG Retail Sales Monitor showed on Tuesday.Retail sales fell by 1.3% in June on an annual basis, compared to a 2.3% rise in the same month a year ago. This brought the three-month average to a decline of 0.1% and the twelve-month average to a rise of 0.6%, the lowest since the monitor's records began in December 1995.On a like-for-like basis, UK sales fell at an annual rate of 1.6% in June, versus a 1.1% rise in the same month the year before.