Ocado has posted flat full-year profits and warned that ongoing investment in its proprietary technology would hamper earnings in 2018.
The online grocer said EBITDA in the 52 weeks to December 3, 2017, held steady at £84.3m, as losses incurred by its Solutions arm impacted the group’s bottom line.
Ocado cautioned that further capital expenditure into its newest warehouses in Andover and Erith – due to open in the coming months – and an “acceleration” in the development of its automated warehouse would also hit profitability in its current financial year.
However, it insisted EBITDA would “improve significantly” in 2019 through growth of its own retail business and the booking license fees from international partners, including French grocery giant Casino and Canadian supermarket operator Sobeys.
To coincide with its preliminary results, Ocado issued an extra 5% of its share capital with investors to raise up to £140m.
Ocado boss Tim Steiner said the cash would help fund the initial outlay required by the business for it to establish overseas partnerships. The tie-ups cost Ocado around £30m in capital expenditure.
“Now is the time to take advantage of our growth opportunities,” Steiner said.
“We will invest to ramp up our new solution in both Erith and Andover and to have the right resources in place to meet growing demand for the Ocado Solutions offer.
“We believe that taking advantage of these international opportunities now will make our virtuous cycle turn faster in the years ahead and we expect that to translate into higher returns on capital. We look forward to our future opportunities and challenges.”
Ocado said EBITDA from its retail operations increased 4.5% to £79.2m across the 52-week period.
Revenues from its online grocer channel jumped 12.4% to £1.3bn during the period, bolstered by a 11.2% boost in active customer numbers to 645,000.
By contrast, Ocado Solutions, which also boasts a long-held partnership with Morrisons in the UK, suffered a 50.9% slump in EBITDA to £2.7m amid its ongoing investment strategy.
However, revenues from its Solutions division increased 16.2% to £115.5m.