Ocado acquires Kindred Systems and Haddington Dynamics for £222 million
The UK online supermarket raises its full year profit forecast.
The grocery retailer expects sales to increase by £30 million in fiscal 2021.
Ocado Group plc (LON: OCDO) on Monday raised its profit forecast for the full year. The company said that retailers remain robust in its joint venture with UK multinational retailer Marks & Spencer.
The Ocado Group also announced plans on Monday to acquire an advanced robotics company for unit load picking, Kindred Systems Inc. for £202.77 million. It will also invest a further £19.35 million to acquire a robotic arm designer and manufacturer, Haddington Dynamics Inc.
The UK online supermarket expects that the two acquisitions will help it to expand its presence in robotic solutions outside the food retail sector. In a report released in September, Ocado announced annual sales growth of 52% as demand for online grocery stores showed resilience in the midst of the coronavirus pandemic that has so far infected more than one million people in the UK and caused over 46,000 deaths.
Ocado expects sales to increase by £30 million in fiscal 2021
According to Ocado, it is unlikely that the transactions will have a financial impact in fiscal 2020. For the next fiscal year, Ocado predicts that revenues will increase by approximately £30 million due to the acquisitions. However, its full year EBITDA (earnings before interest, taxes, depreciation and amortization) in FY 2021 is expected to decline slightly.
Against the backdrop of a robust performance in the fourth quarter of the fiscal year, as retail sales at Ocado Retail Ltd. remained strong, the Hatfield-based company raised its full-year earnings guidance. It now forecasts annual EBITDA in excess of £60 million, compared to £40 million it previously estimated. Ocado said:
“Ocado sees continued strong demand as consumers continue to migrate to online grocery retailing in record numbers”.
In a separate news release from the UK, Associated British Foods estimated the loss of sales at £375 million due to the COVID 19 crisis, which is causing stores to temporarily close again.
Ocado’s performance in the stock market
Ocado Group plc jumped nearly 8% in Monday’s trading in front of the market and gained another 2% in the next few hours. Including the price action, the company’s shares are now trading at £25 per share, compared to a much lower level of £10.64 per share in the last week of February. Ocado started the year at £12.60 per share. Learn more about how people make money on the stock market.
At the time of writing this article, the world’s largest specialized online grocery retailer has a market capitalization of £18.70 billion.