LONDON (Reuters) – Britain’s Ocado <OCDO.L>, the online supermarket and technology company, reported a 46% fall in first-half core earnings, reflecting the impact of a fire at a flagship robotic warehouse as well as accounting changes and the cost of share schemes.
Despite the earnings fall Ocado, whose shares have increased 48% so far this year, said on Tuesday it was confident about its outlook.
“We have never had as many opportunities to grow as we do today,” said Chief Executive Tim Steiner.
Ocado made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £18.7 million in the 26 weeks to June 2 versus a restated £34.8 million in the same period last year.
After a fire in February devastated Ocado’s robotic warehouse in Andover, southern England, the group warned of a reduction in sales growth until it increased capacity elsewhere.
That extra capacity was secured through a deal with Morrisons <MRW.L>, Britain’s No. 4 supermarket group, in May, giving Ocado sole use of its newest customer fulfilment centre (CFC) in Erith, south east London.
Ocado said retail revenue growth in the half was 9.7%, with the impact of the Andover fire estimated at 2% of sales.
Prior to the blaze the Andover centre was providing about 10% of Ocado’s UK capacity.
The fire did not stop Ocado making deals. In February it announced a £1.5 billion joint venture with Marks & Spencer <MKS.L> to provide M&S with a home-delivery service from September 2020 at the latest.
Though Ocado has only a 1.3% share of Britain’s grocery market, its £8.3 billion stock market valuation has been driven by the technology side of its business – providing international retailers with the infrastructure and software to develop their own online grocery businesses to compete with the likes of Amazon <AMZN.O>.
In the first half fees from technology partners increased 36% to £122.7 million.
Ocado said its EBITDA performance for the full 2019 year was tracking in line with market expectations, adjusted for the £15 million impact of the Andover fire and share incentives worth £10 million.
(Reporting by James Davey; editing by Kate Holton)