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Ocado posted a £394m annual loss last year, despite a 9.9% sales rise as the cost of technology and rolling out its operations internationally continue to weigh on its bottom line.

Total group revenue for the 52 weeks to 27 November increased by 9.9% to £2.77bn in the period.

It saw particularly strong growth in its technology solutions arm, which was up 44.3% to £420.5m.

During the year it added 12 new additional modules to take its average live modules to 105, including its first customer fulfilment centre (CFC) in the Asia-Pacific region for Aeon in Japan, the third CFC for Sobeys in Calgary, Canada, and the eighth CFC for Ocado Retail in Luton, UK.

UK retail revenue increased by 7% year on year to £2.36bn, reflecting growth of 5.9% in active customers to 998,000 at the end of the year.

Retail price inflation continued, with the average item price up 7.9% to £2.74, which was partially offset by smaller basket sizes, declining 4.5% to an average of 44.2 individual items.

Orders per week grew by 4.0% to 393,000, driven by the increase in active customers and partially offset by the lower frequency of orders.

Logistics revenue grew by 0.7% to £667.5m and primarily represents cost recharges to Ocado Retail and Wm Morrison Supermarkets of £633.9m.

Group adjusted EBITDA of £51.6m was up £125.7m from a loss of £74.1m last year.

Technology Solutions had a positive contribution of £15.4m, Ocado Logistics was at £30.1m, while Ocado Retail returned to a positive adjusted EBITDA of £10.4m.

Performance was helped by cost reductions across the group and operational efficiencies and lower support costs.

However, the group made a statutory loss before tax of £393.6m, which was an improvement from the £500.8m loss posted last year.

The headline loss includes depreciation, amortisation and impairment charges of £395.9m, continuing rollout of OSP hardware and software at CFC sites, and net finance costs of £73.2m.

The overall profit figure was improved by net adjusting items of £23.9m income, which is largely income from the £187m settlement reached with AutoStore Technology relating to patent infringement offset by the reduction in the value of the contingent consideration due from M&S and one-off costs relating to changes in Ocado Retail’s UK site network.

CEO Tim Steiner commented: “I am pleased to report good progress across the Group in 2023. Our technology is transforming the way people shop for food as we help some of the world’s best and most innovative retailers set the bar for excellence in grocery e-commerce worldwide. We now have installed capacity at our retail partners for gross annual grocery sales of over £8bn.

“Ocado Retail, our JV with M&S in the UK, has had significant success growing customer numbers, taking online grocery market share and rebuilding profitability, proving, once again, the attractions of our online model. Ocado Intelligent Automation, which brings our world-leading automated storage and retrieval systems technology, and the automation of warehouses to sectors outside of grocery, signed its first deal with pharmaceutical giant McKesson in Canada.

“These are all big, tangible steps forward which demonstrate that our passion and talent for innovation is delivering significant growth. There is, of course, much more to come and much more to do.

“In the current year, we expect our partner success programme to help put our partners well on the path to generating attractive returns from their investment in the Ocado Smart Platform, a key deliverable to drive orders for more capacity in their existing sites and additional future sites. This is, for now, the primary focus of the business and we are encouraged by the progress we are making in helping our partners get the best out of the technology that we have successfully installed for them. At Ocado Retail, we expect further progress on its trajectory to restore an industry-leading EBITDA margin over the mid-term. We are also confident in our ability to win new OIA deals as we bring our solution to the non-grocery market.

“Future success will be driven by the characteristics that have always set Ocado apart: our ability to solve some of the most difficult engineering challenges in the market, our capacity to innovate at pace, and our discipline to turn vision into reality. I’m confident we will turn these qualities into faster growth, stronger cashflows, and higher returns, in the current financial year and beyond.”

Ocado shares are up 1.9% this morning to 500.1p.

Morning update

Consumer health group Haleon has posted growth in sales and profits for 2023, driven by both price and volume growth.

The group’s total organic growth was 8%, with 7% price and 1% volume/mix.

Its power brands were up 9.1% in organic growth terms, with six of the nine key brands in double-digit growth.

In total, 58% of its business gained or maintained market share.

Total full year revenues were up 4.1% to £11.3bn with foreign exchange reducing revenue growth by 3.8% and M&A by 0.1%.

Adjusted operating profit was also up 10.4% constant currency to £2.55bn, with adjusted operating profit margin up 50pts at constant currency to 22.6%.

Reported operating profit was up 9.4% to £2bn, with significantly lower separation and admission costs partly offsetting negative FX.

Haleon said its three-year £300m productivity programme is on track, delivering efficiencies, increasing agility and supporting continued investment including in A&P.

Meanwhile it continues to drive portfolio optimisation, with its Lamisil sale completed in October and ChapStick disposal announced in January 2024.

In 2024 it expects another year of strong growth, with organic revenues expected to be up 4%-6% and positive operating leverage to deliver organic operating profit growth ahead of organic revenue growth.

CEO Brian McNamara commented: “I am very pleased with our results. We delivered strong organic growth of 8%, with Q4 organic growth over 6%. We saw positive volume/mix in the full year, up slightly in Q4, demonstrating continued resilience in challenging markets. Importantly, we saw organic growth across all regions and categories, with healthy momentum in our power and local growth brands.

“Within 18 months of our demerger, we reduced net debt by over £2bn, bringing net debt/adjusted EBITDA down from c.4x to 3x, reflecting both strong cash conversion and financial discipline, underpinning an increased dividend payout and share buyback.

“In 2024, we expect the operating environment to remain challenging. We are confident, however, that we are well positioned to deliver on both guidance for 2024 and over the medium term.”

Elsewhere, global brewing giant AB InBev delivered sales and profit growth, but global momentum was partially offset by ongoing performance issues in the US.

The group’s total revenues for 2023 were up 7.8%, with revenue per hectalitre up 9.9%.

Revenue growth slowed to 6.2% in the fourth quarter as the benefits of pricing eased.

The group saw a 24.6% increase in combined revenues of core global brands, Budweiser, Stella Artois, Corona and Michelob Ultra, outside of their respective home markets in the fourth quarter, and 18.2% in the full year of 2023.

Total volumes were down 1.7% in the full year and 2.6% in the fourth quarter.

For the full year own beer volumes were down 2.3% and non-beer volumes were up by 2.1%.

Overall volumes were hit by a 15.3% slump in the US, primarily driven by a sharp drop in sales of Bud Light after controversy over a marketing campaign.

2023 normalised EBITDA increased by 7% to US$19.98bn and normalised EBITDA margin contracted by 23 bps to 33.6%.

Michel Doukeris, CEO, AB InBev, commented: “Our business delivered another year of consistent profitable growth with a revenue increase of 7.8% and EBITDA growth of 7.0%.

“Strong free cashflow generation enabled us to progress on our deleveraging, propose an increased dividend to our shareholders and execute on a $1bn share buyback.

“Our results are a testament to the strength of the beer category, resilience of our business and people, consistent execution of our replicable growth drivers and our unwavering commitment to invest for long-term growth and value creation.”

On the markets this morning, the FTSE 100 has rebounded 0.2% to 7,639.2pts.

Risers include Haleon, up 7.8% to 338.4p, Just Eat, up 3.1% to 1,294.6p and B&M European Value Retail, up 1.5% to 530.4p.

Fallers include Glanbia, down 3.4% to €16.22, Reckitt Benckiser, down 1.2% to 5,003.2p and Diageo, down 0.8% to 2,981.5p.

Yesterday in the City

The FTSE 100 closed down 0.8% at 7,624pts.

Reckitt Benckiser slumped 13.3% back to 5,062p as it performed below City expectations in 2023 as like-for-like revenues declined 1.2% in an “unsatisfactory” fourth quarter.

Just Eat was down 2.2% to 1,256p as it improved adjusted underlying profits in 2023 despite orders and gross value transaction declining as cash-strapped consumers opted for fewer takeaways.