Ocado Group Plc · LSE:OCDO
Ocado — FY2024 Earnings Presentation
60 slides from Ocado's earnings presentation, Jan 14, 2025
Slide 1: Full Year 2024 Results Announcement
GROUP Full Year 2024 Results Announcement
Slide 2: Forward-looking statements
OCADO GROUP FULL YEAR 2024 RESULTS ANNOUNCEMENT Forward-looking statements Disclaimer This presentation contains oral and written statements that are or may be “forward-looking statements” with respect to certain of Ocado’s plans and its current goals and expectations relating to its future financia
Slide 3: Adam Warby, Chair
Adam Warby Chair, Ocado Group
Slide 4: Stephen Daintith, Chief Financial Officer
Stephen Daintith Chief Financial Officer, Ocado Group Note: the financial review numbers are on an un-rounded basis.
Slide 5: FY24 Financial Progress
OCADO GROUP FINANCIAL REVIEW FY24 Financial Progress 1 • Revenue +14% Group revenue Group adjusted EBITDA* Technology Solutions +18%, Ocado Retail +14% and Logistics +8% • EBITDA up £102m +14%1 +£102m1 Technology Solutions EBITDA of £81m, now at 16% margin Underlying cash flow2 Liquidity • Underlyin
Slide 6: Revenue and EBITDA up across the Group
OCADO GROUP FINANCIAL REVIEW Revenue and EBITDA up across the Group £M FY24 FY23 CHANGE % Revenue Technology Solutions 496 420 18% Logistics 718 668 8% Retail 2,686 2,358 14% Eliminations (744) (680) (9)% Total Group 3,156 2,766 14% Adjusted EBITDA*3 CHANGE £ Technology Solutions 81 15 66 Logistics
Slide 7: Technology Solutions
Technology Solutions
Slide 8: Technology Solutions: EBITDA of £81m, margin now 16%
OCADO GROUP FINANCIAL REVIEW Module growth and cost reductions; EBITDA of £81m, up £66m, 87% flow through, margin now at 16% £M FY24 FY23 CHANGE % Revenue +18%: growth driven by increase in live modules, OSP Average number of fee mix, inflation and OIA 116 105 11% live modules Revenue4 496 420 18% o
Slide 9: Recurring revenue of £416m – 84% of total revenues
OCADO GROUP FINANCIAL REVIEW Recurring revenue of £416m – 84% of total revenues A growing base of live modules With better revenue per module Drives our recurring revenues Average live modules5 Annualised recurring revenue per module Recurring revenue # £m £m 11 6 10 5 84 47 41 55 3.5 3.6 416 363 3.
Slide 10: CFC go-lives & drawdowns to drive module growth
OCADO GROUP FINANCIAL REVIEW CFC go-lives & drawdowns to drive module growth At least seven CFC openings through to FY27 Phoenix & Charlotte to go live early 2026 Period-end live modules # c.150 FY24 – 12 incremental modules: • Incremental drawdown on live CFCs 123 • 3 new CFCs live: Sydney, Melbour
Slide 11: Continued cost control across all cost lines
OCADO GROUP FINANCIAL REVIEW Continued cost control across all cost lines Direct operating costs to reduce further Technology spend reducing as we Support costs continue to fall; investing as we optimise our sites complete our Re:Imagined investment to support partners Technology Solutions contribut
Slide 12: Ocado Logistics
Olerlere
Slide 13: Ocado Logistics: reliable generator of EBITDA and cash
OCADO GROUP FINANCIAL REVIEW Ocado Logistics: reliable generator of EBITDA and cash £M FY24 FY23 CHANGE % Revenue +8%: driven by 8% growth in cost recharges and Revenue 718 668 8% fee revenue; higher volumes through CFCs (orders +11%, eaches +12%) Costs (687) (637) (8)% Costs +8%: UPH improvement =
Slide 14: CFC productivity continues to improve – led by Luton UPH
OCADO GROUP FINANCIAL REVIEW CFC productivity continues to improve – led by Luton UPH OSP CFCs overall productivity UPH6 +9.1% YoY Deliveries/8hr shift (DP87) slightly lower YoY OSP CFC UPH Drops per van route (normalised for an 8-hour shift) # # 227 208 21.3 21.5 21.0 184 FY22 FY23 FY24 FY22 FY23 F
Slide 15: Ocado Retail
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Slide 16: Ocado Retail: strong revenue growth, EBITDA +£34m
OCADO GROUP FINANCIAL REVIEW Ocado Retail: strong revenue growth, EBITDA +£34m; underlying margin of 2.9% 8 £M FY24 FY23 CHANGE % • Revenue +14%: strong growth in customers & frequency; Revenue 2,686 2,358 14% UK online grocery market share +1.8ppt to 12.9% • Gross profit %: increase of £117m: outpa
Slide 17: Ocado Retail: strong customer growth & order volumes
OCADO GROUP FINANCIAL REVIEW Ocado Retail: strong customer growth & order volumes, basket dynamics stable FY24 FY23 CHANGE % • Perfect Execution resonating with customers; unbeatable choice; unrivalled service; reassuringly good value Revenue £m 2,686 2,358 13.9% • Strong growth in orders (+12.5%) a
Slide 18: Ocado Retail KPIs progress further
OCADO GROUP FINANCIAL REVIEW Ocado Retail KPIs progress further; strong customer growth and increasing capacity utilisation Basket items stable despite Active customers9 continuing to show Capacity increased frequency strong growth utilisation increasing Ocado.com eaches per basket Ocado.com active
Slide 19: Intention to deconsolidate Ocado Retail in early April
OCADO GROUP FINANCIAL REVIEW Our intention to deconsolidate our Ocado Retail (ORL) joint venture in early April Ocado Retail is a joint venture, 50% owned by Ocado Group, and 50% by M&S. The original 2019 Shareholder Agreement Income Results will be shown as a single line planned for an accounting c
Slide 20: Ocado Group Cash Flow
Ocado Group Cash Flow ! an
Slide 21: EBITDA growth and lower CapEx driving cash flow improvement
OCADO GROUP FINANCIAL REVIEW EBITDA growth and lower CapEx driving cash flow improvement in FY24 £M FY24 FY23 YOY £M 1H24 2H24 FY24 vs. FY23 Adjusted EBITDA* 153 54 +99 71 82 • Clear progress to turning cash flow positive Movement in during FY26 98 48 +50 22 76 contract liabilities • Adjusted EBITDA
Slide 22: Total cash flow moves closer to break even
OCADO GROUP FINANCIAL REVIEW Total cash flow moves closer to break even Reported cash flow of £113m Reported cash outflow £m +£111M • Total cash outflow of £113m (224) (113) • £100m of the AutoStore settlement received in FY24 vs. £42m in FY23 • £46m of refinancing discount on the issue and redempti
Slide 23: Cash flow trajectory, technology spend, liquidity, guidance
1. Cash flow trajectory & drivers 2. Technology spend and Support costs 3. Liquidity 4. Guidance
Slide 24: Clear trajectory to turning cash flow positive during FY26
OCADO GROUP FINANCIAL REVIEW Clear trajectory to turning cash flow positive during FY26 Underlying cash flow2 £m Clear path to cash flow positive 1H21 2H21 1H22 2H22 1H23 2H23 1H24 2H24 1H25e 2H25e 1H26e 2H26e (27) (196) (197) (175) (298) (396) (432) Underlying cash flow Underlying cash flow before
Slide 25: Cash flow trajectory underpinned by business model and spend reductions
OCADO GROUP FINANCIAL REVIEW Cash flow trajectory underpinned by the resilience of our business model and spend reductions by FY27 1 Contribution 2 Technology spend and Support 3 Ocado Retail to return to growth costs to decline cash generation Contribution (Technology Solutions) Fixed costs12 (Tech
Slide 26: Technology spend will reduce as Re:Imagined R&D cycle completes
OCADO GROUP FINANCIAL REVIEW Technology spend will reduce as we complete our Re:Imagined R&D cycle FY24 Technology R&D CapEx weighted to the Re:Imagined • FY24 Technology R&D CapEx of £197m suite of technologies 40 • CFC technologies, £105m; core of OSP - grid, bots and peripherals; to reduce capita
Slide 27: Good progress on Support costs; more to do
OCADO GROUP FINANCIAL REVIEW Good progress on Support costs; more to do Lowering Support costs will remain a focus • FY24 costs £174m vs. FY23 £191m Support costs (including partner facing teams) £m • Continue to drive efficiencies without compromising our core or ability to grow 208 • FY27 Support
Slide 28: Strong liquidity enabled by improving cash flows
OCADO GROUP FINANCIAL REVIEW Strong liquidity enabled by improving cash flows Liquidity position remains in excess of £1bn Managing our debt maturities in an orderly way Cash and liquidity Summary Debt Profile £m £m 300 1,072 Cash and cash equivalents 772 Convertible bond (Dec-25) (167) 772 Senior u
Slide 29: Proactively managing liabilities to extend debt maturity profile
OCADO GROUP FINANCIAL REVIEW Proactively managing our liabilities to extend our debt maturity profile FY24: Refinanced £700m debt whilst retaining a strong liquidity profile Senior Debt Profile NOV-23 NOV-24 £M MATURITY PRINCIPAL PRINCIPAL COUPON • Issued £700m of new debt via the high yield and £60
Slide 30: FY25 guidance – a year of measured growth
OCADO GROUP FINANCIAL REVIEW FY25 guidance – a year of measured growth; on track to turn cash flow positive during FY26 REVENUE ADJUSTED EBITDA* Technology Solutions c.10% growth 20-25% EBITDA margin Ocado Logistics High mid-single digit % growth c.£30m Ocado Retail Above 10% growth c.4% underlying
Slide 31: Tim Steiner, Chief Executive Officer
Tim Steiner Chief Executive Officer, Ocado Group
Slide 32: Online remains the fastest growing channel in global grocery
OCADO GROUP STRATEGIC REVIEW Online remains Last Reported Quarterly Sales Growth the fastest growing channel in global grocery 20% 0% Tesco Ocado Walmart Kroger Loblaws Sobeys Woolworths Coles Retail US Total LFL (incl. Online) Online LFL 32
Slide 33: Technology drives best customer experience online, positive economics at scale
OCADO GROUP STRATEGIC REVIEW Our technology drives the EBITDA margin best customer experience Offline Grocery Online picked from store Online with OSP CFCs Online with OSP CFCs online globally, with positive 2024* Mid Term* economics at scale We are ahead of We’re incredibly schedule with the excite
Slide 34: The conventional way
OCADO GROUP STRATEGIC REVIEW The conventional way 34
Slide 35: The Ocado way
OCADO GROUP STRATEGIC REVIEW The Ocado way 35
Slide 36: Underpinned by Ocado's IP Estate
OCADO GROUP STRATEGIC REVIEW Underpinned by Ocado’s IP Estate larger than UK grocery industry combined Last Mile optimisation calculations per second Supply chain Webshop forecasts per day product predictions a day CFC of operations simulated in 12 months 36
Slide 37: Most online grocery fulfilment remains manual
OCADO GROUP STRATEGIC REVIEW Today the majority of fulfilment solutions in online grocery remain manual, at a time when the channel is growing and labour scarcity and cost are increasing challenges Ocado’s latest generation CFCs are capable of saving almost an hour of labour per basket compared to t
Slide 38: Ocado's labour productivity has radically improved
OCADO GROUP STRATEGIC REVIEW Ocado’s labour 25 200 productivity has Labour minutes to fulfil 50 item basket in an Ocado CFC Minimum Wage growth (index) 175 radically improved, 20 more than 150 offsetting 15 cost of real 125 wage increases 10 100 2012 2014 2016 2018 2020 2022 2024 * Based on avg mini
Slide 39: Driving down the most significant cost component
OCADO GROUP STRATEGIC REVIEW Driving down the Equivalent cost 7x greater in store pick most significant 4.0 cost component Implied labour cost per order ($)* 3.5 of online grocery fulfilment 3.0 2.5 2.0 * Based on avg minimum wage growth ($) in OSP partner markets 2012 2014 2016 2018 2020 2022 2024
Slide 40: Re:Imagined technologies being rolled out worldwide
OCADO GROUP STRATEGIC REVIEW 2024 marked the closing stages of a significant R&D cycle. Our Re:Imagined technologies are now being rolled out worldwide, enabling a potential 50% increase in labour productivity across our partners’ CFCs On Grid Robotic Pick (OGRP) Auto Frame Load (AFL) Autobagging Ta
Slide 41: On Grid Robotic Pick productivity
Option A OCADO GROUP STRATEGIC REVIEW OGRP Luton productivity with OGRP Since Sept 2023 275 Productivity (UPH) 250 225 200 Boundary pushing Operating in a chaotic, AI and robotics physical environment 175 150 DEC JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV Andover CFC Luton CFC With zero margin for
Slide 42: Bots increasingly efficient
OCADO GROUP STRATEGIC REVIEW Our bots are increasingly efficient. By the end of 2024 we will require 15% fewer bots per $100m sales throughput Reduction in Bots Required per $100m Sales 100 75 Index 50 25 0 2024 Jan 2025 END 2025 42
Slide 43: Work rate per bot versus largest cube ASRS competitor
OCADO GROUP STRATEGIC REVIEW Ocado Group had A work rate (distance travelled) per bot that travelled than the largest cube in 2024 ASRS competitor in 2024 43
Slide 44: Lessons from global CFC deployments
OCADO GROUP STRATEGIC REVIEW We have learned valuable lessons from our global CFC deployments, which we break down into three categories 44
Slide 45: Growing well: CFCs at or approaching profitability
OCADO GROUP STRATEGIC REVIEW Growing well: The largest category Mature CFC (International) comprises CFCs operating at or 74.55% approaching profitability Earlier stage CFC (International) CFCs are located in Partners have a good Partners are investing right geographies, with logistics operation in
Slide 46: Growing, but with improvements needed
OCADO GROUP STRATEGIC REVIEW Growing, but with improvements needed Some CFCs in this Some more mature CFCs have We are confident that current partner success category are in an required more support to establish initiatives and new tech delivering in 2025 will early stage of ramp, at efficient logis
Slide 47: Some sites require a new strategic approach
OCADO GROUP STRATEGIC REVIEW Some sites will require a new strategic approach to generate full value Retailer’s webshop Marketplace B2B A small number of CFCs are We are supporting We are not growing as originally partners to fill confident of expected. These are due to underutilised generating mark
Slide 48: 2025 focus on targeted innovations
OCADO GROUP STRATEGIC REVIEW Our focus in 2025 is now on a smaller number of targeted innovations that will deliver outsized, long-term benefits for all partners 48
Slide 49: Rolling out OSP Swift Router
OCADO GROUP STRATEGIC REVIEW We are now rolling out OSP Benefits of the ‘Swift Router’ following successful swift router trials in 2024 Generic CFC Model % CFC direct volume SLTO LLTO 1 - 6 hours Same day Next day + 100% Same day % split of slots available 75% to customer* 1 – 6 hours 50% Next day +
Slide 50: Swift Router launching in 2025
OCADO GROUP STRATEGIC REVIEW LAUNCHING IN 2025 The retailer sets the availability they want OSP dynamically "pulls" work into the to achieve to serve in any given zone - CFC at the last moment, in order to OSP uses Al to automatically set the maintain CFC throughput and efficiency. delivery routes b
Slide 51: Building sites half the size at same order volumes
OCADO GROUP STRATEGIC REVIEW We can now build sites that are half the size while achieving the A 6 module CFC if designed today same order volumes A typical 6 module Lower Lower live CFC rent CapEx higher productivity More direct Faster delivery break-even 51
Slide 52: Standout solutions to the labour productivity challenge
OCADO GROUP STRATEGIC REVIEW Ocado continues to Delivering exciting new deliver standout innovations in 2025 solutions to the labour to continue building productivity challenge in volumes, enhancing CFC global supply chains operations, and driving a step-change in capital efficiency for future sites
Slide 53: Q&A
Q&A
Slide 54: Appendix
Appendix
Slide 55: FY24 Adjusting items
OCADO GROUP APPENDIX FY24 Adjusting items £M FY24 FY23 Litigation settlement 11 186 Changes in fair value of contingent consideration (29) (68) ORL - UK Network Capacity review (4) (32) ORL - Zoom Network Capacity review (2) (27) Organisational restructure (5) (16) Litigation costs net of cost recov
Slide 56: Module Pipeline
OCADO GROUP APPENDIX Module Pipeline Year end modules 239 232 232 Live modules at existing sites 213 25 32 52 Undrawn modules at existing sites 41 37 168 40 Design capacity of sites in construction 37 Design capacity of ordered sites not yet under construction 141 54 46 82 49 46 44 60 29 49 123 18 1
Slide 57: Glossary
OCADO GROUP APPENDIX Glossary Active customers – a customer who has shopped at Ocado.com Live module – means modules that are fully installed and available within the previous 12 weeks for use by our partners Average live modules – based on average weekly live modules in Mature customer – defined as
Slide 58: Glossary (continued)
OCADO GROUP APPENDIX Glossary (continued) Ocado Retail average basket value (£) – product sales divided by Ordered modules – represent the maximum module capacity of total orders sites for which a contractual agreement has been signed with a partner and an invoice has been sent for the associated fe
Slide 59: Summary of footnotes
OCADO GROUP APPENDIX Summary of footnotes 1. Unless otherwise stated, the % changes and £m variances 7. DP8 represents Ocado Retail only compare FY24 to FY23 on a 52-week basis 8. Excluding £33m of Hatfield CFC fees, Ocado Retail’s underlying 2. Underlying cash flow is the movement in cash and cash
Slide 60: Legal bits
OCADO GROUP APPENDIX Legal bits Kroger is a registered trademark of The Kroger Co. Bonpreu is a registered trademark of Bon Preu group. Morrisons is a registered trademark of Wm Morrison Sobeys is a registered trademark of Sobeys Inc. Supermarkets Plc. Coles is a registered trademark of Coles Superm