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(Bloomberg) — Ocado Group Plc shares surged as the provider of robotic warehouses narrowed its losses, even after delays from some key customers.
The British company nearly halved its pretax loss for the first half of the year to £154 million ($200 million), a better result than analysts expected, and said cash flow is improving.
Ocado’s shares rose almost 20% in early London trading, having lost half their value so far this year.
It comes a day after Ocado shares tumbled when an analyst said the company needs to “seriously consider its options” given project delays and liquidity challenges.
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Ocado, which was founded by three former Goldman Sachs bankers, sees its future as a maker of automated warehouses for supermarkets around the world. But key customers including US grocer Kroger Co. and Canada’s Sobeys have slowed their rollout of new warehouses, hindering Ocado’s ambitions.
Most of its revenue still comes from the online grocery venture it shares with Marks & Spencer Group Plc.
M&S is withholding a final payment to Ocado related to the performance of the venture, called Ocado Retail. Ocado Group Chief Executive Officer Tim Steiner declined to comment on negotiations Tuesday, saying they were confidential.
Steiner said customers are now shopping online again after the company suffered when they returned to stores following the pandemic.
“This whole idea that customers deserted online — there may be some of that that’s true at the other grocers, but it’s not what we saw,” he said on a call with Bloomberg News. “It’s just that customers went back to their previous habits.”
Ocado said underlying cash flow this year will improve by £150 million ($194 million), up from a previous estimate of £100 million. It also expects underlying profit margins this year for its technology division, which licenses software to grocers worldwide, to be slightly higher than it previously guided.
Bloomberg Intelligence analyst Charles Allen said a lack of new automated warehouse orders helped Ocado to improve its cash flow.
—With assistance from Kimberley Mannion.
(Updates with shares, CEO and analyst commentary and additional details throughout.)
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