Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Most probable outcome to below events...
"Sainsburys financial update - 25th April - Little effect on Ocados SP
Ocado AGM - 29th April. Tim Steiner gets his pay award through just after a large shareholder rebellion
Kroger Update - 8th May - Very little positive news for Ocado from Kroger
M&S financial update - 22nd May - No resolution to the Ocado payment. JV still underperforming. 25% overcapacity of Ocado retail outlined by M&S previously has reduced a little but will take more than a year more to resolve.
Ocado - HY results - 16th July. Ocado retail disappointing, v small profit. Ocado group large losses obscure increase in overseas solutions income.
Obviously it shows the Ocado solutions model hasn't worked for Kroger breaking into new markets as it had hoped. Read across is that Kroger will build far fewer Ocado spokes in the future and be hesitant about moving into geographies where it has no physical presence. Other potential grocery partners overseas will pick up on Kroger's dissatisfaction with the Ocado spoke performance.
A continuation of the obvious downtrend for the share price. Negative issues in Ocados 2 major contracts. Kroger closing Ocado spokes, M&S threatened with the prospect of legal action. Huge overcapacity issue at Ocado retail hampering profitability. Large annual losses still being recorded by Ocado group. Chairman leaving. New grocery partner sign up very slow to Ocados solutions etc.
Iranian drone attacks. Stock market slide. Oil price spike, Ocados delivery model is a heavy consumer of fuel as it delivers to customers from heavily centralised hubs. Risk assets sold off. Ocado share price drop continues.
It's this element of Tim Steiners proposed pay that's the most contentious...
"Steiner would also be able to receive an award worth 600% of his base salary, or almost £5m, even if targets for total shareholder returns and other performance measures are met but the share price goal is missed."
https://www.retailgazette.co.uk/blog/2024/03/ocado-15m-ceo-bonus/
Punters are just buying in for speculation however the direction of travel re this share is obvious.
Negative issues for Ocado on their major 2 contracts, Kroger and M&S. Huge overcapacity at Ocado retail. Recent large Ocado group annual loss declared. Very slow sign up of new Grocery partners. Chairman stepping down. Interest rates predicted to stay higher for longer after recent data.
Yes the Autostore cash in this year's p&l. It won't be available to help obscure losses next year.
The Kroger Ocado relationship is key to the share price imo. The longer Kroger extend their pause on commissioning new CFCs then the share price will continue to drift. Personally I believe they will continue to pause commissioning new CFCs for another 3 months +
Ocado groups losses from recent FY 2023 annual financial report as below:
"Loss before tax of £(394)m, taking into account £187m from the settlement reached with AutoStore, an improvement of £107m versus FY22"
Were it not for the one off Autostore payment to Ocado then Ocados losses for FY23 would have been greater than FY22.
The Autostore payment to Ocado of £187m is included in the Ocado group 2023 annual financial report figures.
Marks and Spencer's upcoming payment to Ocado is due to be £190m. It's heavily contested by Marks and Spencer's and may be subject to a legal dispute. That upcoming payment is widely known to the market and is a one off payment.
"Loss before tax of £(394)m, taking into account £187m from the settlement reached with AutoStore, an improvement of £107m versus FY22"
Above is from latest annual results. Were it not for the one off payment from Autostore to Ocado then the losses this year would have been higher than previous year.
No sign currently that the cash burn rate is slowing..
high cash burn and heavy annual losses are a big worry for the market in the higher interest rate world of today. huge issue for ocado is that the new grocery partner contract flow has been very slow since the new reimagined technology was developed. investors are happy to keep financing an operation when new contracts are being signed regularly however of late the contracts have been sp****.
kroger and ocado retail have paused commissioning further cfcs so cash flows to ocado from any new cfcs re these contracts are pushed further into the future.
ocado retail used to provide strong cash flow to the group. currently though ocado retail has 25% spare capacity. grocery prices are being reduced in an effort to drive up customer orders however this impacts their profit margin.
This mornings move was speculation the share had bottomed out, no news backing it up. Back on the downwards trend now. Investors reverting to looking over the recent negative news flow re Ocado and concerned re the groups losses at in a higher inflationary environment.
If inflation remains higher then interest rates do not fall at the same pace as previously thought. Ocado is still posting substantial annual losses. High interest rates means higher financing costs when it asks the markets for cash in the coming years. Ocados profitability would then be delayed further into the future.
Waccybaccy,
I did not bring up this subject in this instance. Was replying to a direct question from Sangijuelas1 if you read the thread...
The spoke Kroger issue is a direct driver of the recent Ocado share price move downwards. Why would you not want to discuss it?
Having consulted Ocado, Kroger thought the costs, performance of Ocados delivery solution would allow them to enter into these new markets. That's been a costly mistake for Kroger and costly to Ocados delivery model reputation.
Sangijuelas1,
Yes, those spokes were part of Kroger's strategy to move into markets across the US in which they had no physical store presence. Those spokes underperformed and are to close. Obvious read across is that Kroger are going to be far more cautious about using Ocados delivery model to push into those markets. Those new markets represented a major opportunity for Kroger and Ocado. There are likely now to be far less spokes built by Kroger, a large potential revenue loss for both Kroger and Ocado. Kroger have had a pause on commissioning further Ocado tech for an extended period now.
Other grocers will be more reticent in using Ocados solutions as a result of its failure re Kroger breaking into new markets.