Ocado warns on profits ahead of results Monday, 19th December 2011

Ocado has warned its profit is likely to have been hit by capacity problems experienced at the online grocer’s warehouse.

The retailer said “capacity constraints” and “production issues” at its Hatfield depot would undermine profit margins in the fourth quarter.

Ocado said earnings were expected to be in the range of £27.5 million to £28.5 million in the year to 27 November, compared to £22 million in 2010.

Gross sales were approximately £643 million for the financial year, up 16.7 per cent on the previous year.

For the full financial year 98.3 per cent of items were delivered as ordered and 92.3 per cent of orders were on-time or early for their one hour delivery slots.

Ocado chief executive Tim Steiner said: “We are encouraged by the operational capacity improvements that we have made, but are disappointed that we did not achieve as large or as early an increase as we had originally planned.

“There is more work to be done and we are focused on delivering capacity and sales growth in the first half of 2012.”

Construction of Ocado’s second depot in Warwickshire “remains on-time and on-budget”, according to the retailer, as capital expenditure comes in lower than expected for the year, in the range of £125 million to £130 million, due to the timing of capital expenditure payments.

The group’s full year results will be released on January 31, 2012.

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