UK retailer Ocado significantly reduced its losses thanks to continued investment in its tech arm, which contributed to revenue growth.

According to its latest half-year report, Ocado’s Technology Solutions business continues to show strong financial progress, with revenue growth steadily rising to 21.8%.

In its report, Ocado posted total group revenue of £1.5 billion for the first half of the year, reporting losses of £153.9 million, 46.8% less than the same period in 2023 (£418 million).

Ocado’s stocks sharply ramped up to 18% hitting 409.1p on Tuesday after the profit margin and group cash flow guidance were lifted, reassuring investors.

The group currently runs an online supermarket in Britain through a joint venture with Marks & Spencer and sells its cutting-edge warehouse technology to retailers internationally.

Last week, the online grocery giant revealed plans to build a new robotic warehouse in Japan as part of a deal with Japanese retail giant Aeon, expanding its presence and services in the country.

First deals to provide high-tech customer fulfilment centres to the Japanese retail firm began in 2019, with the new facility representing the third warehouse opened since then.

In September 2023, the firm also launched a robotic fulfilment centre in Luton.

According to the report, the group aims to increase its technology solutions revenue growth to up to 20% and expects the technology solutions division to achieve a ‘mid-teens Ebitda (earnings before interest, tax, depreciation and amortisation) margin in the 2023-24 year, versus previous margins of over 10%.

Chief executive Tim Steiner said the results illustrate progress as the firm continues to support thirteen international grocers to grow their online business with Ocado’s technology.

“We have come through an unprecedented period for online grocery, with multiple years of high food inflation following a surge in demand during the pandemic. The global channel shift to online has now resumed and Ocado is uniquely well[1]positioned to take advantage of the opportunity,” said Steiner.

“Our technology is delivering high levels of productivity and customer satisfaction. In the UK, Ocado Retail continues to lead the way in online grocery, and internationally we have received orders for new capacity, with several of our partners reporting strong digital sales growth year-on-year,” he added.

Prior to the update, Ocado’s shared had fallen to 55% this year, with the decline caused by a slowdown in the rollout of robotic sites and modules for its retail partners, including Kroger and Sobeys, which paused the opening of a robotic warehouse in June.

---