Shares in online grocery delivery firm Ocado (OCDO) jumped 7.6% to £24.48 after it increased full year profit guidance for the second time in seven weeks thanks to record numbers of people signing up to its retail platform.
Having already increased its estimate of earnings before interest, taxes, depreciation and amortisation (EBITDA) from £30 million to £40 million in mid-September, today the company boosted its forecast to ‘over £60 million’.
Its Ocado Retail joint venture with Marks & Spencer (MKS) has seen strong trading through the fourth quarter ‘as consumers migrate to online grocery in record numbers’.
With the UK entering a second month-long lockdown later this week, it’s likely even more consumers will sign up for online grocery delivery so today’s upgrade may not be the last.
In contrast, M&S shares dipped 1.7% to 87.6p as investors fretted over the firm’s bricks-and-mortar business with clothing and homewear sales likely to suffer heavily in the run-up to the key Christmas selling period.
GROWTH INVESTMENTS
The grocery firm also announced two US technology acquisitions worth a total of $287 million ‘to enhance its robotic manipulation capabilities and accelerate the commercial delivery of robotic picking for its OSP (Ocado Smart Platform) clients.’
It is buying Kindred Systems, an advanced piece-picking robotics company, for $262 million in cash, and robotic-arm designer Haddington Dynamics for $25 million using a mixture of cash and new shares.
Chief executive Tim Steiner said that ‘given the market opportunity we want to accelerate the development of our systems, including improving their speed, accuracy, product range and economics.’
The deals also expand Ocado’s capabilities beyond grocery into general merchandise, with Kindred supplying US apparel retailers such as Gap and American Eagle.
Further uses include the possibility of automating functions such as food handling and vertical farming, reducing labour costs.
