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UPDATE 2-Ocado makes first pretax profit, targets overseas deal

Tue, 03rd Feb 2015 10:19

* 2013-14 pretax profit 10.1 mln stg vs loss of 3.8 mln stg

* Outcome is firm's first ever annual pretax profit

* CEO says expects Waitrose deal to run to 2020

* Shares up 3 pct (Adds detail, CEO comments, shares)

By James Davey

LONDON, Feb 3 (Reuters) - British online grocer Ocado reported an annual pretax profit for the first time inits 15 year history on Tuesday and said it aimed this year toseal its first technology deal with an overseas retailer.

Ocado, founded by three former Goldman Sachs bankers in2000, has divided analysts like few other stocks, with someviewing its door-step deliveries from giant distribution centresas the future of grocery shopping and others seeing it as acostly and complicated venture that will never make much money.

The company, whose investors have included Tetra-Pakbillionaire Jorn Rausing and former U.S. vice-president Al Gore,signed its first third-party deal in 2013 to carry out onlineorders for British grocer Morrisons, and believes it canalso help foreign retailers to ramp up their online businesses.

"We are targeting to sign the first such agreement during2015 although there is no guarantee we can meet this timeline,"Chief Executive Tim Steiner told reporters, adding he wastalking to parties in Europe, North and Latin America and Asia.

Ocado shares, which have had a rollercoaster ride since theydebuted at 180 pence apiece in 2010, were up 3.1 percent to428.3 pence at 1000 GMT.

"Investor willingness to be short of the shares may diminishin the months ahead given management's clearer optimismregarding a deal being signed," said Barclays analysts, who havea "neutral" rating on the stock.

Ocado reported a pretax profit before one-off items of 10.1million pounds ($15.2 million) in the year ended Nov. 30. Thatwas in line with analyst expectations and compared with a lossof 3.8 million pounds the year before.

Its gross retail sales rose 15.3 percent to 972.4 millionpounds and were up 14.8 percent in December.

The firm said it expected to continue growing slightly aheadof the online grocery market, though it noted some rivals'online growth had recently slowed.

Online grocery sales rose by about 16 percent in Britainlast year, compared with little or no growth in the broadermarket. While online orders account for less than 5 percent oftotal UK food and grocery sales, industry body IGD forecasts themarket will more than double to 17 billion pounds by 2019.

Ocado's range includes products supplied by upmarket grocerWaitrose. Though the contract runs to 2020, there is apossible break point in spring 2017 requiring 18 months notice.That means in theory either party could serve notice towards theend of 2015.

"I see no reason at the moment not to continue until the endof the contract in 2020 and I've no information that anyone elsefeels otherwise," said Steiner.

($1 = 0.6657 pounds) (Editing by Kate Holton and Mark Potter)

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