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Home » Companies » OCADO GROUP PLC (OCDO)

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Personal Care, Drug and Grocery Stores

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Current disclosures in OCADO GROUP PLC, 5 currently shorting.

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0.79%

-0.04%

Fri July 26, 2024

0.52%

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1.49%

-0.03%

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0.70%

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Tue October 1, 2024

Total shorts: 5.74%

Posts: 261
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Posted: November 28, 2017

Statement regarding international partnership

RNS Number : 6603X
Ocado Group PLC
28 November 2017

This announcement contains inside information

28 November 2017

Ocado Group plc / Groupe Casino

Announcement of international partnership between Ocado Solutions and Groupe Casino

We are pleased to announce the signing of an agreement between Ocado Group plc ("Ocado") and Groupe Casino to develop the Ocado Smart Platform ("OSP") in France.

Ocado is the world's leading dedicated on-line grocery retailer with a strong technological advantage. The scalable, modular end-to-end solution provided by the OSP is a unique answer to the opportunities and challenges posed by shifting offline/online trends in grocery.

This highly innovative and effective commercial formula will be achieved through access to Ocado's end-to-end solution, including the construction of its latest generation, state-of-the-art automated warehouse (for which Ocado will invest to install its grid and its robots), Ocado's best-in-class front-end web site functionality, last-mile routing management and big data, real time implementation.

Groupe Casino's banners will benefit from this innovative grocery e-commerce platform, firstly Monoprix.fr, which will provide its customers with the largest assortment of food items at the best levels of service and costs.

The agreement sets out plans for the immediate initiation of the development of a Customer Fulfilment Centre ("CFC") using Ocado's proprietary mechanical handling equipment ("MHE") to serve the Greater Paris area, the Normandie and Hauts de France Regions. The build and launch is expected to take at least two years.

In consideration of the investments made by Ocado, of maintenance and of provision of technology, Groupe Casino will pay Ocado certain upfront fees upon signing, and during the development phase, then ongoing fees linked to its utilisation of capacity within the CFC and service criteria.

In addition to the initial CFC, Groupe Casino and Ocado will consider further development of other CFCs close to other large urban areas.

Jean-Charles Naouri, CEO of Groupe Casino, said:

"Groupe Casino is pleased to announce the agreement with Ocado Group which will allow it to develop an integrated customer and logistics platform, considered the best in the market.

"This agreement is a major leap in terms of quality: 50,000 food items will be offered in the first stage to customers in the Greater Paris area with precise and speedy delivery at home and through a platform which makes it achievable to do this profitably. Groupe Casino is very proud to have sealed this deal with Ocado which will further strengthen the quality of service available to its customers, at the core of its commitments for 120 years."

Tim Steiner, CEO of Ocado, said:

"We are delighted that Groupe Casino has decided to partner with Ocado Solutions to grow and develop its online food business. We believe that the scalable, modular end-to-end solutions provided by the Ocado Smart Platform, will allow retailers such as Groupe Casino to build their online grocery offer in a way that is profitable and sustainable, creating value for customers, suppliers and shareholders.

"We continue to make investments to commercialise our proprietary platform and expect this deal to be one of many successful collaborations with leading retailers to use it the world over."

Luke Jensen, CEO Ocado Solutions, said:

"Groupe Casino is a successful multi-format, multi-banner and multi-channel business with top-three market positions in all the countries in which it trades. Its decision to adopt the Ocado Smart Platform to build and drive its online food business in France gives it a unique, innovative, and world-leading solution to the challenge of delivering groceries profitably online. We look forward to working closely with Groupe Casino going forward".

Expected financial impact for Ocado

Ocado expects this deal to create significant long term value to the business. It will have minimal impact to earnings in FY17, given the current financial year ends on 3 December 2017. In FY18, Ocado expects the transaction to be earnings neutral with the costs of establishing the partnership, offsetting the initial fees payable. Ocado expects to incur additional capex of £15m in the FY18 to support this partnership and accelerate the development of the platform, with further capex in future years.

In FY19 and beyond, the profitability of Ocado Solutions is likely to grow as the fees from the transaction increase and as other deals are signed.

In order to provide greater clarity on the split between Ocado Retail and Ocado Solutions Ocado will, from the publication of FY17 results, be introducing segmental reporting of sales and EBITDA. The Group will be hosting a call in mid-January when it will publish historic numbers for each segment to enable analysts and investors to prepare their numbers accordingly.