Ocado turns profit at last but no dividend likely

 

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The Independent Online

Ocado has finally turned an annual pre-tax profit after 15 years in business – but its chief executive warned yesterday that the online grocer does not intend to issue a dividend for the “foreseeable future”.

Ocado, which delivers its own products as well as those of Waitrose and Morrisons, made a £7.2m pre-tax profit in the year to 30 November, improving on a £12.5m loss previously.

Its founder and chief executive, Tim Steiner, said of its maiden profit: “It’s still not our focus. Our focus is on long-term value creation for our shareholders.

“Had it been our focus we could have done it before, but we’re focused on what we are trying to build for the future.” Sales jumped 15.1 per cent to £972.4m.

He added: “We have absolutely no intention of paying a dividend in the foreseeable future. If you look at some of the largest most successful companies in the world, they don’t pay dividends. They’re constantly reinvesting their cash.” Ocado invested £78.8m last year.

Ocado has faced fierce criticism from the City since its controversial stock market listing at 180p in 2010, as sceptics doubted the possibility of turning a profit with high investment and delivery costs.

Mr Steiner, a former Goldman Sachs banker who founded the company in 2000, has argued vehemently that the business needed to build scale to turn a profit and that consumers are moving towards buying food online.

Clive Black, a veteran grocery analyst told The Independent, said: “We may need to remain patient for Ocado to deliver material earnings per share, which stood at just over one penny in full-year 2014, so that its stock price can be considered a sensible value in our view, never mind pay a dividend, which remains some time off.”

Mr Steiner said Ocado was at the “forefront of an online grocery revolution” and hinted that it could quickly build on the £170m deal struck with Morrisons last year.

He said a replatforming of Ocado’s IT had equipped it well to “take advantage of future opportunities as the demand for online grocery shopping increases internationally”.

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