Ocado raises profit target after ‘strong’ start to M&S deal

An Ocado delivery
An Ocado delivery (PA Wire)
9:38am, Mon 02 Nov 2020
CBAD8A00-D2B9-4E0E-ADDF-D0366C357A34 Created with sketchtool. E9A4AA46-7DC3-48B8-9CE2-D75274FB8967 Created with sketchtool. 65CCAE04-4748-4D0F-8696-A91D8EB3E7DC Created with sketchtool.

Online retail giant Ocado has increased its profit target for the year after hailing “strong” recent sales through its new joint venture with Marks & Spencer.

The retail and technology business also revealed the acquisition of two robotics firms.

In an update to shareholders, it said it now expects to post earnings before interest, tax, depreciation and amortisation of £60 million, ahead of its previous £40 million guidance.

Ocado said it “continues to see high demand as consumers migrate to online grocery in record numbers”.

Chief executive Tim Steiner said demand has grown in recent days ahead of an impending second lockdown but said customers stopped short of mass stockpiling.

“We are seeing very strong demand at the moment but customers are not particularly stockpiling toilet roll or anything like that,” he told reporters.

It launched the £1.5 billion joint venture with Marks & Spencer at the start of September, as it severed ties with long-term grocery partner Waitrose.

The update came as Ocado announced the acquisition of two robotics companies for a total of 287 million US dollars (£222.3 million) as it continues to grow its warehouse technology operations.

It said it has agreed to acquire piece-picking robotic firm Kindred Systems for 262 million US dollars (£203 million) and robotic arm designer Haddington Dynamic for 25 million US dollars (£19.3 million).

Mr Steiner said: “Ocado has made meaningful progress in developing the machine learning, computer vision and engineering systems required for the robotic picking solutions that are currently in production at our customer fulfilment centre in Erith.

“Given the market opportunity, we want to accelerate the development of our systems, including improving their speed, accuracy, product range and economics.

“I am delighted to be welcoming Kindred Systems and Haddington Dynamics to the Ocado group, as we believe they have the capabilities to allow us to accelerate delivery, innovate more, and grow faster.

“I am also excited by the opportunity to enter new markets for robotic solutions outside of grocery that is demonstrated by Kindred Systems’ robust growth, with existing customers such as Gap and American Eagle across the general merchandise and logistics sectors.”

Shares in Ocado jumped 8.8% higher to 2,476p in early trading on Monday.

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