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Ocado Group PLC on Thursday backed its cash flow target, and while earnings got a boost from the receipt of termination fees from partners, shares in the warehouse automation firm and online grocery company took a dive. Ocado shares plunged 15% to 150.80 pence each, making it by far the worst FTSE 250 performer, with the stock now down almost 40% over the past 12 months. Ocado has a market capitalisation of £1.26 billion. Shares are down some 95% from a peak of 2,914p achieved back in September 2020, when the Covid-19 pandemic lifted demand for online grocery shopping. Tim Steiner, chief executive officer of the Hatfield, England-based firm, said he is ‘as excited and energised about Ocadožs future as I have ever been’. Steiner’s future has been in focus recently. The firm earlier in July said he will remain CEO through the start of the 2028 financial year as part of its planned leadership transition. Ocado’s financial year runs to November. In the first half of May 31, Ocado swung to a pretax profit of £17.1 million, from a loss of £173.1 million a year prior. Revenue shot up 54% to £1.04 billion from £674.0 million. Adjusted earnings before interest, tax, depreciation and amortisation jumped to £432 million from £92 million. However, both the top and bottom lines got a £354 million boost from non-recurring income, stemming from termination fees from partners. In January, Stellarton, Canada-based partner Sobeys Inc said it had decided to close one of its three Ocado-powered customer fulfilment centres. Additionally, Kroger Co last year said it was closing three customer fulfilment centres in Frederick, Pleasant Prairie and Groveland. Frederick is in Maryland, Pleasant Prairie is in Wisconsin, and Groveland is in Florida. Ocado and Kroger had struck a deal back in 2018, when they had agreed to build the equivalent of 20 customer fulfilment centres, where automated robots sort orders. Stripping out these items, revenue growth was only 1% to £684 million, and the adjusted Ebitda declined to £81 million. At Technology Solutions, the adjusted Ebitda fell 18% to £60 million from £73 million a year prior when stripping out the termination fees. It totalled £410 million when these were included. In the Logistics division, adjusted earnings were 15% higher on-year at £22 million from £19 million. The company has a 50% stake in the Ocado Retail Ltd joint venture, alongside Marks & Spencer Group PLC, which achieved an adjusted Ebitda surge to £73 million from £33 million. In May, the FTSE 250 listing announced a deal to develop supermarket Asda StoreS Ltd’s online business across the UK with the Ocado Smart Platform. Ocado said the focus of the partnership will be to quickly replace and upgrade Asda’s existing e-commerce infrastructure with Ocado’s platform, with the aim of going live in early 2027. Ocado on Thursday noted a ‘step-change in commercial engagement’. It said the US is a ‘large focus market with multiple live engagements’. The company said six customer fulfilment centres are to go live in the next two to three years, including sites in Busan in South Korea, and Tokyo this financial year. In the pipeline for the next financial year and the one after is another CFC going live in Tokyo, as well as openings in Barcelona and Phoenix, US. Finally, a CFC in Seoul is set to go live in financial 2029. Back in its February annual results, however, it reported the Seoul CFC was to open by financial 2028. For the current year, it expects Technology Solutions revenue of around £500 million. This is in line with guidance given in February and would represent a decline from £561.2 million in financial 2025. At Ocado Logistics, it still expects high mid-single-digit revenue growth from the £800.3 million achieved in the prior. In addition, Ocado still expects to be cash flow positive during the second half of the year. For the full year, it continues to expect an underlying cash outflow of around £200 million, when excluding closure fees. Ocado affirmed its view that it will be free cash flow positive in financial 2027. In the first half of the financial year, its underlying cash outflow before the closures amounted to £147 million, stretching from £108 million 12 months earlier. CEO Steiner said: ‘The first half of the year has seen accelerating international volume growth, strong commercial momentum, improved organisational efficiency, and rigorous cost discipline. Since the start of the year, wežve been re-engaging retailers across some of the worldžs largest grocery markets, with the USA a particular focus, supported by a significantly evolved portfolio of technology solutions. ‘Alongside a more focused R&D investment strategy, we have made significant organisational changes to strengthen cost and capital discipline while improving the effectiveness of our commercial operations. As we continue to focus on delivering growth and efficiency, we will achieve positive cash flow in the second half of the year and be full-year cash flow positive in FY27.’ Steiner continued: ‘I remain fully focused on executing our strategy and creating value. I am pleased that, in recent weeks, we have established a clear process for long-term succession planning at Ocado. We have the best technology in the industry, exceptional talent, and a tremendous opportunity ahead of us.’ Following the appointment of a successor, Steiner will continue to be ‘actively involved’ in the company, providing strategic guidance to the board and management team and support to customers through 2029, Ocado explained earlier in July. Late last month, the Financial Times reported that multiple ‘top 10’ Ocado shareholders were ‘mounting a rearguard action’ to convince the board not to oust Steiner. This followed an announcement by Ocado a week earlier, in response to a Sky News report, confirming that the board, led by Warby, was engaged in ‘long-term succession planning’. Back in February, Ocado said it would be cutting 1,000 jobs as it scaled back research and development investment and simplified its operating model. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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