Ocado secures second year of profits

Ocado reported a second year of increased profits; profit before tax rose 65% to £11.9 million, while EBITDA increased almost 14% to £81.5 million. And revenues were up 17% to £1.1 billion for the 52 weeks ending 29 November 2015.

The grocery eCommerce company said its customer acquisitions have increased 20% over the year, while active customers increased 12.4% to 509,000 and order volumes grew 16.8% to over 195,000 per week. Ocado sales increased nearly 15% to £1.1 billion, but the average basked size has declined in value by 2.1% to £109.95.

Last year, Ocado announced it wanted to sign a deal with an international grocer to use its proprietary Ocado Smart Platform. While the deal was expected to be finalised by the end of 2015, there is still no news over Ocado's second customer in its financial results on Tuesday.

The e-tailer said it remains confident and expects to sign "multiple deals in multiple territories" in the medium term.

Meanwhile, after 12 months of online trading, Morrisons – Ocado's first customer to use its outsourced eCommerce platform – has reported online sales reaching around £200 million.

Ocado CEO, Tim Steiner, said: "The continued enhancement of Ocado's industry-leading technology and investment into our retail proposition over the course of the year has meant our customers now have greater choice, competitive prices and consistently high order accuracy and on-time delivery. As a result, customer numbers grew, reflected in strong revenue growth in a very challenging market environment."

Steiner also said the e-tailer wil soon open its next Customer Fulfilment Centre in Andover which includes the first installation of Ocado's new proprietary equipment solution. "This has been designed and is manufactured in Britain by Ocado, and will significantly further enhance our capabilities and efficiencies.

"We are transforming the shopping experience for the benefit of our customers in the UK, and expect to do so for customers in other countries through Ocado Smart Platform. We look forward to making further progress over the current financial year," he added.

Ocado also did not mention the rumours that eCommerce giant, Amazon, is interested in buying the company to enable the launch of Amazon Fresh in the UK.

IT spend

The e-tailer also said the replatforming of its IT systems is progressing well, remaining in line with expectations, and over the next year it intends to migrate most of its systems to run on a public or private cloud to give Ocado more technical agility and to support its international expansion plans.

Ocado said its proprietary IP, knowledge and technology drives its operating efficiencies and provides competitive advantages across the business. At the end of the year period, Ocado had filed 32 patent applications, bringing the cumulative total number of patent applications filed to 73, of which 25 have been published.

Ocado said: "We continued to develop our platform with the rewrite of our IT systems to enable faster replication and roll out of our technology internationally, and remain on track with our plans. This has been supported by the expansion of our technology team which by the end of the period employed over 700 developers and IT professionals (up from 550 last year), with plans to increase this to around 1,000 by the end of 2016."

Over the last year, the e-tailer spent £18.1 million (up from £14.1 million in 2014) on internal technology development costs, while a further £4.9 million (2014: £2.7 million) was spent on computer hardware and software.

Meanwhile capital expenditure of £13.3 million was spent to further develop Ocado's next generation fulfilment solution.

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