(Alliance News) - Ocado PLC on Tuesday posted double-digit interim revenue growth, breaching the GBP1 billion mark, as Covid-19 led to the online grocer enjoying a spike in demand.
Revenue in the 26-week period ended May 31 surged 23% year-on-year to GBP1.09 billion from GBP882.3 million. The figure includes its UK and international solutions businesses, but in Ocado's Retail arm alone, revenue was 27% higher annually at GBP1.02 billion.
Ocado trimmed its pretax loss to GBP40.6 million from GBP147.4 million a year ago. The narrowed loss was helped by Ocado reporting GBP39.1 million from an exceptional gain, compared to a GBP99.0 million such loss in the first half of last year.
Last year's exceptional cost was primarily due to the write-off of assets at its Andover customer fulfilment centre, which was destroyed by a fire. The exceptional gain this time around was largely a GBP36.3 million insurance reimbursement for that disaster.
Hindering a swing to profit was a 20% annual rise in distribution and administrative costs to GBP390.6 million.
Like for the first half of last year, Ocado proposed no interim dividend.
"We achieved significant sales growth influenced by the customer demand due to Covid-19, while continuing to transform our business to deliver our international contracts," the FTSE 100 firm explained.
"The retail business achieved record-breaking revenue growth while progressing its plans to switchover to M&S products."
Ocado announced in August of last year that it would sell 50% of its retail business to Marks & Spencer Group PLC. It will mean that later this year, Ocado will stock over 5,000 M&S grocery products and terminate its current arrangement with John Lewis & Partners-owned grocer Waitrose.
Looking ahead, Ocado said it has a "positive outlook for online grocery" but its forecast for retail revenue growth is suspended due to uncertainty surrounding Covid-19.
The virus initially led to consumers in the UK stockpiling household goods, out of fear of shortages further down the line. "Stay at home" measures also meant that more turned to online grocery shopping, to such an extent that Ocado in March had to temporarily close its website to cope with demand.
Chief Executive Tim Steiner said: "As a result of Covid-19 we have seen years of growth in the online grocery market condensed into a matter of months; and we won't be going back. We are confident that accelerated growth in the online channel will continue, leading to a permanent redrawing of the landscape of the grocery industry worldwide."
Ocado shares were 3.7% lower at 1,957.50 pence each in London on Tuesday morning. The stock is up 56% so far in 2020, however.
By Eric Cunha; ericcunha@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Ocado (OCDO)
Marks & Spencer (MKS)