Ocado Group Plc · LSE:OCDO

Ocado — H1 2022 Earnings Presentation

37 slides from Ocado's earnings presentation, Jul 21, 2022

Slide 2: Forward-looking statements
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 financial condition, performance and results. These forw
Slide 6: Update on key financial priorities
Update on key financial priorities Priorities to support sustained growth Progress in 1H 2022 ✓ Modelling seminar held 25 May outlining roadmap for growth OSP economics ✓ Update of operating economics and ROCE at latest UK site ✓ H2 FY22: Cash flow modelling seminar to be held Capital allocation ✓ O
Slide 7: Financial summary
Financial summary £ million H1 2022 H1 2021 Change Revenue1 1,262.4 1,319.9 (4.4)% EBITDA (13.6) 61.0 (74.6)m Loss before tax2 (204.3) (80.9) (123.4)m ● Revenue decline of 4.4% driven by the challenging trading environment for Ocado Retail (-8.3%); reduced basket sizes/value post-pandemic, compounde
Slide 8: Retail: customer & order growth in a challenging trading environment
Retail: customer & order growth in a challenging trading environment £ million H1 2022 H1 2021 Change Revenue1 1,122.2 1,224.1 (8.3)% EBITDA* 31.3 104.1 (72.8)m ● Continued positive customer acquisition (+11.6% to 867,000 active customers), growing share in a challenging market (now at around 12% of
Slide 9: Retail: key drivers show encouraging underlying progress
Retail: key drivers show encouraging underlying progress Robust customer acquisition Normalising trend in basket Fall in average basket3 value more underpins steady orders growth volume behind fall in basket value than offset progress on orders in 1H22 48 eaches2 per basket 1H22; Revenue reflects cu
Slide 10: Retail: near-term margin impact of cost of living crisis and inflation
Retail: near-term margin impact of cost of living crisis and inflation Lower volumes relative to fixed costs Compounded by well And market-wide increases drive near term margin pressure publicised increases in utility prices in customer acquisition costs Cost deleverage underpins rise in cost per Ut
Slide 11: Retail: a closer look at operating performance
Retail: a closer look at operating performance % Revenue 1H22 1H21 Resilient despite impact of lower volumes, supplier cost Gross margin (incl. media) 34.3% 36.0% inflation and cost-of-living down-trading down Underlying drop efficiency +10% per shift, offset by Trunking and delivery costs (11.8)% (
Slide 12: UK Solutions & Logistics: cost inflation increased cost per unit
UK Solutions & Logistics: cost inflation increased cost per unit £ million H1 2022 H1 2021 Change Fee revenue1 79.7 73.2 8.9% Cost recharges2 315.9 284.1 11.2% Revenue 395.6 357.3 10.7% EBITDA 28.6 30.1 (1.5)m Eaches 611.9 670.6 (8.8%) ● Fee revenue (+8.9%) reflects: ○strong growth in capacity fees
Slide 13: UK Solutions & Logistics: explaining revenue growth v volume decline
UK Solutions & Logistics: explaining revenue growth v volume decline Disconnect between volume (-8.8%) and cost recharges Headline fee growth not reflective of underlying (+11.2); cost inflation pressure and immature volumes growth in Technology Solutions capacity fees 17% increase in underlying cos
Slide 14: UK Solutions & Logistics: driving underlying operational efficiencies
UK Solutions & Logistics: driving underlying operational efficiencies Underlying improvements in drop efficiency Strong progress on productivity within our CFCs per van per shift not reflected in reported DPV KPI Overall productivity improving, with newest robotic sites Notable improvement in per sh
Slide 15: International Solutions: starting to recognise material revenue
International Solutions: starting to recognise material revenue £ million H1 2022 H1 2021 Change Fees invoiced1 61.1 50.2 21.7% Revenue2 58.5 26.6 119.9% EBITDA (57.2) (56.6) (0.6)m ● Fees invoiced of £61.1m (up 21.7%); (design and capacity fees) for CFC and ISF commitments; growth reflects healthy
Slide 16: International Solutions: a growing installed revenue base
International Solutions: a growing installed revenue base >3x increase in modules live with international partners With robust growth in build pipeline Now live with 10 international sites, including our first +38 more modules ordered since H1 FY21, CFC in Sweden, second in Canada, and CFCs 3-6 in U
Slide 17: Capital expenditure: continued investment in Technology Solutions
Capital expenditure: continued investment in Technology Solutions Increase in capex driven by continued investment in Technology Solutions Ocado Retail & Logistics 367 53 ● Ocado Retail & Logistics: c.90% CFC land & 314 buildings, remainder largely logistics investment 26 103 Technology Solutions +£
Slide 18: Technology Solutions: scaling up and improving economics
Technology Solutions: scaling up and improving economics Successfully building into secure and visible recurring revenue base A revenue base that we expect to deliver attractive returns >£750m in proforma revenue capacity ordered so far (221 modules) Strong progress on operating cost >£900m mid-term
Slide 19: Technology costs at close to peak levels
Technology costs at close to peak levels Approaching peak technology investment run-rate expected through the mid-term Developing as expected in near term to mid-term Headcount >2,700 at 1H22, Costs to run OSP expected to reduce from FY23 c.300 higher than prior year to c.£200m annual run-rate in th
Slide 20: Group support costs developing as expected
Group support costs developing as expected H1 FY22 costs of £56m; investments to support early stage roll out; costs expected to remain flat in real terms in mid-term 9 56 ● Inclusive of total Group (P&L) costs for: ○ Group Operations 47 ○ Platform Implementation (PI) ○ Client Services (CS) ○ Soluti
Slide 21: Strong cash position supports our significant growth plans
Strong cash position supports our significant growth plans Current liquidity position of c.£2bn; no further Group financing required through the mid-term, by which time we expect to be cash flow positive Total liquidity of c£2bn pro forma for £878m capital raise Breakeven operating cash flow Investi
Slide 22: Accounting update
Accounting update ● Under IFRS16, lease costs of CFCs used exclusively by Ocado Retail have been determined as finance leases (exclusive use = full right-of-use accounting treatment) ○ accounted for as finance income in UK Solutions & Logistics, finance costs in Retail ○ excluded from EBITDA in both
Slide 23: Outlook for FY22 - on track to deliver results in line with prior guidance
Outlook for FY22 - on track to deliver results in line with prior guidance (FY21 Results, 8 February and Ocado Retail Trading Update, 25 May) Revenue ● Ocado Retail: low single digit growth reflecting the impact of the cost of living crisis in the UK on consumer behaviour ● UK Solutions & Logistics:
Slide 25: 1. Strong execution: ramp up of CFCs
1. Strong execution: ramp up of CFCs Significant ramp in partners and robotic With leading service fulfilment sites live in the last 3 years levels and improving efficiencies 8 of 11 OSP clients now live on our platform Partner commentary is consistently positive Sobeys: Ocado’s central fulfilment a
Slide 26: 1. Strong execution: driving return on capital
1. Strong execution: driving return on capital Latest UK site on track for 22% ROCE, clear line of site to 30% with further improvements on the roadmap Beyond 30% ROCE Opportunities for further improvement: 22% ROCE - sharing benefit of Including expected 15% Re:Imagined operating improvement in cap
Slide 27: 2. Ocado Re:Imagined: transforming the economics of OSP
2. Ocado Re: Imagined: transforming the economics of OSP Recapping the headlines: targeting further step changes in capital and operating costs, and platform flexibility, for partners and Group 30-40% 300+ 15%+ 50% >5x reduction in UPH (mature reduction reduction in time increase in share of labour
Slide 28: 2. Ocado Re:Imagined: delivery on track, strong partner response
2. Ocado Re: Imagined: delivery on track, strong partner response 600s grid, On-Grid Automated optimised Robotic Pick Frameload Orbit 600s bot site design (OGRP) (AFL) (virtual DC) Swift Router Ocado Flex Progress - testing - first build - can pick 30% - Myrmex - Canning town - version 1 live - demo
Slide 29: 3. Expanding and evolving the OSP 'club'
3. Expanding and evolving the OSP ‘club’ Building momentum with current partners and prospects Building on the Growing and evolving unique value of the Adding new partners with current partners OSP ‘club’ Groupe Casino: Ocado Beyond 2022: Auchan Polska: - OSP: can work with new - Bringing prospects
Slide 30: 4. Ample liquidity to deliver on our ambitious growth plans
4. Ample liquidity to deliver on our ambitious growth plans No additional Group financing expected as the business becomes cash flow positive Today Mid-term (4-6 years) Growth to >£750m Annual capex of annual EBITDA; c.£700m: £2bn underpinned by - c.60%+ allocated Cash flow positive growth in Soluti
Slide 31: 5. Ocado Retail: a resilient model for challenging times
5. Ocado Retail: a resilient model for challenging times New geographies, new customer pools; North-West/East Zoom roll out: expansion of immediacy offer in London, Leeds Sustainable, and Bristol through 1Q23 diversifying NPS 25ppts above other customer Profitable model at all sizes grocery peers on
Slide 32: Conclusion
Conclusion ● The Ocado Smart Platform is now powering the online grocery activities of 8 of the world’s leading food retailers. We will add another 3 partners to OSP next year ● We have now opened 16 CFCs internationally, of 58 contractually committed so far. Each of these CFCs will generate strong,
Slide 34: Appendix: footnotes to slides
Appendix: footnotes to slides SLIDE 7 1. Revenue is a. Retail - online sales (net of returns) including charges for delivery but excluding relevant vouchers/offers and value added tax, b. International Solutions - the fees charged to international clients and c. the recharge of costs and associated
Slide 35: Appendix: proforma view of 1H 2022 for new segments
Appendix: proforma view of 1H 2022 for new segments On 25th May 2022, Ocado Group hosted a seminar ‘Modelling & Roadmap for growth’, accessible on the Group website. As part of this seminar, the Group presented a view of business performance mapping reporting operating segments to underlying busines
Slide 36: Appendix: proforma view of 1H 2022 for new segments
Appendix: proforma view of 1H 2022 for new segments On 25th May 2022, Ocado Group hosted a seminar ‘Modelling & Roadmap for growth’, accessible on the Group website. As part of this seminar, the Group presented a view of business performance mapping reporting operating segments to underlying busines
Slide 37: Appendix: proforma view of 1H 2022 for new segments
Appendix: proforma view of 1H 2022 for new segments On 25th May 2022, Ocado Group hosted a seminar ‘Modelling & Roadmap for growth’, accessible on the Group website. As part of this seminar, the Group presented a view of business performance mapping reporting operating segments to underlying busines

Ocado Group — H1 2022 Earnings Presentation on 6ix

Ocado — H1 2022 Earnings Presentation

Slide 1: H1 FY22 Results: 5 building blocks for momentum

Slide 2: Forward-looking statements

Slide 3: The Chairman's Overview

Slide 4: Financial Review

Slide 5: Financial Review - agenda

Slide 6: Update on key financial priorities

Slide 7: Financial summary

Slide 8: Retail: customer & order growth in a challenging trading environment

Slide 9: Retail: key drivers show encouraging underlying progress

Slide 10: Retail: near-term margin impact of cost of living crisis and inflation

Slide 11: Retail: a closer look at operating performance

Slide 12: UK Solutions & Logistics: cost inflation increased cost per unit

Slide 13: UK Solutions & Logistics: explaining revenue growth v volume decline

Slide 14: UK Solutions & Logistics: driving underlying operational efficiencies

Slide 15: International Solutions: starting to recognise material revenue

Slide 16: International Solutions: a growing installed revenue base

Slide 17: Capital expenditure: continued investment in Technology Solutions

Slide 18: Technology Solutions: scaling up and improving economics

Slide 19: Technology costs at close to peak levels

Slide 20: Group support costs developing as expected

Slide 21: Strong cash position supports our significant growth plans

Slide 22: Accounting update

Slide 23: Outlook for FY22 - on track to deliver results in line with prior guidance

Slide 24: 5 building blocks for momentum

Slide 25: 1. Strong execution: ramp up of CFCs

Slide 26: 1. Strong execution: driving return on capital

Slide 27: 2. Ocado Re:Imagined: transforming the economics of OSP

Slide 28: 2. Ocado Re:Imagined: delivery on track, strong partner response

Slide 29: 3. Expanding and evolving the OSP 'club'

Slide 30: 4. Ample liquidity to deliver on our ambitious growth plans

Slide 31: 5. Ocado Retail: a resilient model for challenging times

Slide 32: Conclusion

Slide 33: Q&A

Slide 34: Appendix: footnotes to slides

Slide 35: Appendix: proforma view of 1H 2022 for new segments

Slide 36: Appendix: proforma view of 1H 2022 for new segments

Slide 37: Appendix: proforma view of 1H 2022 for new segments