Ocado underlying earnings rise, loss at pretax level

LONDON Thu Feb 7, 2013 7:51am GMT

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LONDON (Reuters) - British online grocer Ocado (OCDO.L) met forecasts with a 20 percent rise in underlying earnings, though the firm still made a loss at the pretax level.

Ocado, whose range includes products supplied by upmarket grocer Waitrose JLP.UL, also said on Thursday its second distribution centre in Dordon, Warwickshire, central England, was on track to open by the end of February, and remains on budget.

The firm reckons the centre will eliminate capacity issues and lead to further efficiency gains.

Ocado made earnings before interest, tax, depreciation and amortisation (EBITDA) of 33.5 million pounds in the 52 weeks to November 25.

That was in line with analysts' consensus forecast and up from 27.9 million pounds in the previous year.

Gross sales rose 11.4 percent to 716.2 million pounds. They were up 14.2 percent in the six weeks to January 6.

However, Ocado made a pretax loss of 0.6 million pounds.

Founded in 2000 by three former Goldman Sachs bankers, the firm is yet to make a profit at the pretax level.

Many of Britain's grocers are finding the going tough, despite their focus on essential goods, as consumers have been hit by below-inflation wage growth and austerity measures.

However, the online food market is growing fast and Ocado has polarised opinion.

Fans point to rapid growth in online grocery sales, its state-of-the-art distribution centre and high customer service ratings.

Sceptics, however, doubt its model of filling orders from central depots will ever be as profitable as online operations at grocers like Tesco (TSCO.L) and J Sainsbury (SBRY.L), which mostly pick orders in stores.

Shares in Ocado, which listed at 180 pence in 2010, have risen two-thirds over the last three months. The stock closed at 104 pence on Wednesday, valuing the business at 601 million pounds.

Ocado is regularly touted as a bid target for Marks & Spencer (MKS.L) as well as Wm Morrison (MRW.L), as neither chain has a significant online grocery business.

(Reporting by James Davey, Editing by Rosalba O'Brien)