Ocado's first-half earnings dented by investment

Ocado's first-half earnings dented by investment
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LONDON (Reuters) - Ocado <OCDO.L>, the online supermarket and technology company, reported a 13.9 percent fall in first-half core earnings on Tuesday, reflecting a step-up in investment in the business.

It said it expected earning trends to improve in the second half of the year however and it also maintained its forecast for retail revenue growth of 10-15 percent for the full 2018 year, assuming economic conditions remain broadly stable.

The group, whose share price has soared 256 percent over the last year on the back of four major overseas partnership deals, made earnings before interest, tax, depreciation and amortisation (EBITDA) of 38.9 million pounds ($51.5 million) in the 26 weeks to June 3.

Ocado had warned in February that investment in its UK distribution centres and software platform would put a brake on earnings this year. It said capital expenditure would be 210 million pounds in 2018, up from 160 million pounds in 2017.

The firm struck its biggest deal so far, with U.S. supermarket chain Kroger <KR.N>, in May. That followed deals with Sweden's ICA Group <ICAA.ST>, Canada's Sobeys <EMPa.TO> and France's Casino <CASP.PA>.

Shares in Ocado listed at 180 pence in 2010. They closed at 1,012 pence on Monday, valuing the business at 6.81 billion pounds.

It said it expects the trends in retail EBITDA to improve significantly over the course of the second half, partly due to lower engineering costs per order and as new capacity at its newest distribution sites at Andover, southern England, and Erith, just outside London, is utilised.

It forecast a decline in Solutions EBITDA as it makes a further 4 million pounds investment.

Ocado also expects additional management incentive charges of about 9 million pounds largely due to its share price performance.

($1 = 0.7557 pounds)

(Reporting by James Davey; editing by Kate Holton)

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