Ocado’s boss said that the company is committed to its London listing, even though it was relegated earlier this year from the FTSE 100.
Tim Steiner said that he did not plan to take the online grocery group private or move its listing abroad, despite speculations about it possibly moving from London to New York.
He said that the London market could be difficult for some companies, referring specifically to the fall in the share price of the company. One could spend a great deal of time trying figure out whether you should go public or private, and where to list your company. As a global technology company, would you be willing to consider other markets in the future? You certainly could.
He said that he did not have any immediate plans to change this, as the group has increased its earnings and cash flow forecasts. “Right Now we are a UK listed plc, and I do not have any immediate plans to alter that.”
Steiner made his comments after Bernstein, a broker, stated on Monday that Ocado should consider whether or not it is right to be listed as a public company due to project delays and challenges with liquidity. Other people have asked about moving the listing to America where investors are more optimistic about tech companies.
Arm Holdings is one of many UK companies that have been listed in New York. The microchip company based in Cambridge went public last fall on Wall Street. Some have not done well. Cazoo collapsed in early this year after snubbing London and float across the pond.
Steiner stated that Ocado Retail, its joint venture with Marks & Spencer, has a very strong retail presence in the UK. It’s only natural that the business would be listed there.
Ocado’s share price collapsed this year, and it was ejected by the blue-chip FTSE 100 Index.
Investors have been concerned about the online grocery group’s lack of profitability.
The majority of the company’s issues are with Ocado Retail, a joint venture between Marks & Spencer. Internet supermarket shopping has never been profitable due to the high infrastructure and logistic costs involved in building a large operation.
Ocado managed to calm some of the City’s concerns on Monday by increasing its full-year predictions.
The company expects its annual cash flow to increase by £150m, up from an earlier estimate of £100m. The group’s pre-tax losses decreased to £154m in the six months ending May from £290m the previous year. The group revenue increased by 12.6% to £1.5 billion.
After revenue grew by 21.8 percent to £241.4 millions in the first half, the company has raised its forecasts for “solutions” — the division of technology that licenses out its warehouse and logistic technology to retailers.
Steiner assured investors Ocado will still be able achieve profitability before tax within the next 5-6 years, even though key partners have paused the rollout. The group expects to become cash flow positive by 2026, despite the fact that it needs to invest significant capital up front to build its robot warehouses.
Ocado shares rose 18% in the early trading of Tuesday, but are still down about 34% over the last year. The stock ended up by 25 1/4p or 7.4 percent at 365 1/2p.
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