Ocado online supermarket delivery van.
Mike Kemp | In Pictures | Getty Images
Ocado shares surged on Tuesday after the British online supermarket and technology group kept its financial guidance for the year as it reported a return to underlying profit in its first half.
Shares surged 15.3% to their highest since February, beating the four-month peak set in June after a report of possible takeover interest from Amazon boosted the company’s stock.
The group made earnings before interest, tax, depreciation and amortisation (EBITDA) of 16.6 million pounds ($21.7 million) in the six months to May 28, versus a loss of 13.6 million a year earlier. Its Technology Solutions revenue jumped 59%.
Chris Beauchamp, chief market analyst at IG Group, said the most encouraging number had been the surge in the Tech Solutions business.
It reminds “investors that the great hope for Ocado shares is that they can license their technology to a broad audience around the globe rather than being just another UK supermarket,” he said.
Ocado Group has three parts to its business – Ocado Retail, an online supermarket joint venture with Marks & Spencer; UK Logistics, which provides fulfillment and delivery support to UK partners, and Technology Solutions which licenses its robot technology for warehouses to other retailers, such as Kroger in the United States, Aeon in Japan and Casino in France.
Ocado said there was no change to the financial guidance given at its full-year results in February.
Jefferies analysts said the headline results looked solid, with Ocado delivering on a pledge to reduce cash burn and reiterating its full-year 2023 guidance.
Ocado’s boss said the company is not looking to be taken over.
“Whenever any offers come, as a management team and a board I’ve got a responsibility to take them seriously but it’s not something I’m out pursuing,” founder and CEO Tim Steiner told reporters after Ocado reported first half results. He declined to comment about speculation of takeover interest by U.S. group Amazon.
Ocado shares surged 32% on June 22 after The Times newspaper reported speculation of possible bid interest in the online supermarket from more than one U.S. suitor including tech heavyweight Amazon. At the time, both companies declined to comment.