Daily Mail

Ocado slides after it taps shareholde­rs for £578m

- By Archie Mitchell

OcadO shares slipped after it tapped investors for £578m of funding – offering up shares at a heavy discount.

The grocer-turned-tech-platform, which sells automated warehouses to supermarke­ts, said the fundraisin­g would ramp up its expansion plans.

Having seen the pandemic accelerate adoption of online shopping, Ocado believes it needs to roll out its high-tech ‘customer fulfilment centres’ even faster.

The warehouses are run by robots that pick, pack and ship out grocery orders.

City analysts were split on the merits of the move. William Woods at Bernstein said despite ‘shortterm pain’ the fundraisin­g would be positive in the long run.

But advising investors ‘ run’, Shore Capital’s Clive Black disagreed: ‘ We do not see this as a fund-raise to deliver growth from a position of strength as opposed to a business that is burning cash and needs access to more equity capital and liquid resources.’

Russ Mould, investment director at AJ Bell, added: ‘Ocado remains a jam tomorrow story... at some point soon it will have to start generating profits and making money, as that’s been the missing component with its story so far.’

Ocado raised the cash by selling shares at 795p each, a 9pc discount to their closing price on Monday night. Shares yesterday fell 2.5pc, or 22p, to 855.6p.

The stock has fallen 50pc this year and 70pc since its Covid peak. Heading in the opposite direction in the FTSE 100 was packaging business dS Smith which clocked up higher profits despite ‘significan­t cost increases’.

The company – which benefited from the boom in deliveries during the pandemic and counts Amazon and Tesco among its largest customers – reported a 71pc rise in profits to £378m in the 12 months to April. Revenue jumped 26pc to £7.2bn. Shares rose 3.7pc, or 11.5p, to 292.8p. The FTSE 100 gained 0.4pc, or 30.24 points, to 7152.05 as the upbeat start to the week continued.

The index was buoyed as a rise in the price of oil above $115 a barrel lifted BP 1pc, or 3.9p, to 395.35p and Shell 1.9pc, or 40.5p, to 2151p.

Firming commodity prices also helped the heavyweigh­t miners with antofagast­a up 3pc, or 38.5p, to 1329.5p while Rio Tinto gained 2.4pc, or 125p, to 5250p.

Analysts warned the gains on the Footsie may be short-lived, however, with official figures today expected to show inflation running at around 9pc.

David Madden, a market analyst at Equiti Capital, said the gains amount to a ‘relief rally’ with concerns of a recession lingering on.

And the FTSE 250 fell 0.3pc, or 61.77 points, to 18949.05.

As Britain’s biggest rail strike in 30 years kicked off, shares in First Group fell 2.7pc, or 3.6p, to 132.4p while Go-ahead was down 0.7pc, or 12p, at 1600p.

Rolls-Royce shares fell 0.7pc, or 0.67p, to 90.83p despite the firm yesterday announcing it would hand 14,000 UK workers a £2,000 one-off payment to help with the cost of living crisis. The cash lump sum will go to 11,000 shop-floor staff and 3,000 junior managers.

There was another day of turmoil for airlines and other travel stocks as chaos continued to plague the industry.

British Airways owner IaG fell 1pc, or 1.24p, to 119.3p while midcap rivals easyJet (down 6.3pc, or 28p, to 415.7p) and Wizz air (off 4.1pc, or 86p, to 2023p) were also on the slide. Holiday firm Tui fell 4pc, or 6.65p, to 158.45p.

The sell- off came as easyJet, which on Monday slashed thousands more summer flights, saw its price target trimmed by UBS and Bank of America. Elsewhere, shares in Telecom Plus rose 3.2pc, or 56p, to 1824p after it posted an 8.5pc rise in annual profits to £47.2m.

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