Ocado earnings up as online retailer bids to raise £200m

OCADO has reported a 20.5 per cent jump in earnings amid price rises and a cut in promotions, and has plans to raise at least £200 million to fund further growth.

The online retailer said underlying earnings rose to £37.6m in the 22 weeks to April 30, compared with £31.2m in a similar period covering the 20 weeks to April 17, following changes to its financial calendar.

Pre-tax profit rose 45.7 per cent to £6.7m amid a “reduced number of promotions” and “limited” price increases for some products while revenue was boosted 24.7 per cent to £600.4m thanks in part to its delivery deal with high street supermarket Morrisons.

The grocer released its financial results as it announced plans to raise fresh funding through senior debt that will be used in part to repay its revolving credit facility as well as bankroll company expansion.

“The proceeds of the offering will support the continued growth of our UK retail capacity, and further improvements to our proprietary platform,” Ocado said. It is understood Ocado would be looking to raise a minimum of £200m.

Ocado shares were down nearly seven per cent. Bruno Monteyne, analyst at Bernstein, said adjusted earnings were only in line with pessimistic forecasts and claimed its fundraising plans confirmed Ocado’s cash-poor position. CONFIDENCE has increased among oil services firms in the North Sea from a record low base but the majority have seen no improvement in their outlook amid still challenging conditions, Aberdeen and Grampian Chamber of Commerce has found.

The results of its latest Oil and Gas survey signalled a notable increase in confidence from the historic lows seen in the last 18 months, accompanied by a growing conviction that life will not get any harder in the area.

However the chamber cautioned that forecasts of a general recovery may be premature.

The findings are released today as the North Sea industry enters the fourth year of the downturn that started in 2014, when the crude price plunged as growth in global supplies ran ahead of demand.

Sector players appear to have given up hopes of a return to the kind of activity levels that were seen in the North Sea amid the boom that ended in that year.

Many are shifting attention to overseas areas where activity levels are higher and the long term prospects better.

Glasgow engineering giant Weir Group yesterday revealed it is buying a Singapore-based oil services firm for $114m (£90m) to increase its presence in Asia and the Middle East

With the firms that operate oil and gas fields expecting to shed more North Sea jobs, albeit at a much slower rate than last year, the outlook for employment appears bleak.

Some 120,000 jobs have been shed across the supply chain since 2014.

The chamber welcomed signs investment in research and development and training is increasing, following deep cuts in spending in response to the crude price plunge.

The results of the latest survey are notably brighter than those completed last year.

However, they suggest the partial recovery in crude prices over the past six months has not transformed the outlook for the North Sea.

Russell Borthwick, the chief executive of Aberdeen and Grampian Chamber of Commerce, said: “This latest edition reveals something of a mixed picture with confidence rising from the record lows measured over the past few surveys but also highlighting that many companies are still experiencing difficult trading.”

The chamber highlighted the fact that 38 per cent of services firms were more confident about their business in the UK North Sea this year than last year. Only 10 per cent were less confident.

The positive balance of 28 per cent is the highest reading since the survey covering the start of 2013, when firms were enjoying boom conditions. There was a negative balance of 35 per cent in the survey completed in October.

More than half, 52 per cent, of oil and gas firms now believe the sector has reached the bottom of the cycle and 26 per cent think it will do within the next year.

Mr Borthwick noted: “It is reassuring to see companies are forecasting an increase in R&D and staff training over the next two years after the significant declines recorded in both areas a year ago.”

Services firms may increase headcount slightly as they eye growth in the decommissioning market.

However, 52 per cent of respondents reported no change in their outlook.

Mr Borthwick said: “International markets are offering more positive opportunities,”

Majors have shifted investment to areas such as West Africa where operating costs are lower than in the North Sea.

Weir has agreed to buy KOP Surface Products from Norway’s Akastor ASA, although the fall in oil and gas activity weighed on the Glasgow group’s profits last year.

Chief executive Jon Stanton said KOP’s position in Asia complements Weir’s leading presence in North America and the Middle East and puts it in a stronger position to benefit as oil and gas markets recover in the future. HOUSEBUILDER Walker Holdings credited growing buyer confidence and a buoyant housing market for boosting its annual profits to £37 million, from £28.3m.

Pre-tax profit rose to £10.3m in the year ending September 30, 2016, up from £7.1m in the prior year. Unit sales increased by 22 per cent for the second year in succession.

While the Livingstonbased company recognised support from the Scottish Government’s Help To Buy scheme for selling more smaller homes, it said that mortgage finance remained a challenge for buyers looking to move.

New developments, it confirmed, would be coming on stream to replace those nearing completion but the group hinted home completions in 2017 would be marginally below those achieved in 2016.

Walker, set up by chairman Mike Walker, said the average price of a home at its developments was £284,000 with the product mix mainly mid-market family housing and the increase coming from homes with higher profit margins.

The company said: “We anticipate margins will fall slightly, reflecting material price increases in the pipeline following the fall in the value of sterling.”

It added that its strong cash flow had allowed it to return profits to shareholders and pursue opportunities to move forward with strategic projects.