Ocado Group Plc · LSE:OCDO
Ocado — FY2020 Earnings Presentation
42 slides from Ocado's earnings presentation, Feb 9, 2021
Slide 1: Ocado Group plc FY20 Results
ocado Ocado Group plc GROUP FY20 Results 9th February 2021
Slide 2: Forward-looking statements
Forward-looking statements 2
Slide 3: Chairman's Overview
Chairman’s Overview Lord Rose 3
Slide 4: 2020 in review
2020 in review Tim Steiner CEO 21
Slide 5: Changing the way the world shops, for good
Changing the way the world shops, for good ‘We are online shopping pioneers. We continue to make the delivery of consumer’s essential groceries fit for modern lives and businesses. Our technologies, combined knowledge and 20 years of experience provide our client partners with exceptional efficiency
Slide 6: Financial Review
Financial Review Andrew Page Deputy CFO 6
Slide 7: Financial Summary
Financial Summary £m FY 2020 FY 2019 Var (%) Group Revenue 2,331.8 1,756.6 32.7% Group EBITDA 73.1 43.3 68.8% Depreciation, amortisation, (168.9) (136.1) 24.1% impairment Net Finance costs (52.8) (27.6) 91.3% Loss before tax (148.6) (120.4) Exceptionals 104.6 (94.1) Loss before tax (44.0) (214.5) po
Slide 8: Segmental Summary
Segmental Summary Revenue1 EBITDA1 2 Var Var £m FY 2020 FY 2019 FY 2020 FY 2019 % % Retail 2,188.6 1,618.1 35.3% 148.5 40.6 265.8% UK Solutions & 654.3 576.0 13.6% 44.4 72.1 (38.4)% Logistics International Solutions 16.6 0.5 - (83.3) (54.9) (51.7)% Other3 - 9.8 - (36.5) (14.2) (157.0)% Total 2,331.8
Slide 9: Ocado Retail: Covid-19 impact on operations
Ocado Retail: Covid-19 impact on operations Change in customer behaviour impacts KPIs Contextualising the impact on financials UPH (mature CFCs2) benefits from recent trends Operating leverage from capacity +5% benefit in CFCs on same fixed cost base Smoothed week; More items per basket, better tota
Slide 10: Ocado Retail performance
Ocado Retail performance FY 20201 FY 20191,2 bps (% Retail Revenue) Product mix and ending of Waitrose Gross margin (incl. media) 34.2 32.9 130 sourcing agreement Trunking and delivery costs (10.8) (12.1) 130 Continued underlying progress, Erith (7.7) (9.1) 140 now above average UPH; benefit of CFC
Slide 11: UK Solutions: Strong client volume growth offset by continued Andover impact and investment
UK Solutions: Strong client volume growth offset by continued Andover impact and investment FY 2020 FY 2019 Var % Fee revenue 117.1 105.9 10.6% Cost recharges 537.2 470.1 14.3% Revenue 654.3 576.0 13.6% EBITDA 44.4 72.1 (38.4)% ● Strong client volume growth ● Revenue growth impacted by Andover (Erit
Slide 12: International Solutions: revenue building, fees invoiced point to strong future growth
International Solutions: revenue building, fees invoiced point to strong future growth FY 2020 FY 2019 Var £m £m % Revenue1 16.6 0.5 - EBITDA (83.3) (54.9) (51.7)% Fees invoiced 123.9 81.4 52.2% ● Revenue building following go-live of CFCs in France and Canada in FY20 ● Cumulative unrecognised invoi
Slide 13: Group net cash flow development
Group net cash flow development £m FY19 Cash position 641 751 inc. £110m Treasury Deposits EBITDA 73 Strong Contract Liabilities 98 operating Insurance proceeds 40 cash flow Working capital 32 Finance costs + other (18) Capex split1 Net debt/finance obligations 882 Share issues 658 Financial Capex1
Slide 14: Outlook for 2021
Outlook for 2021 ● Revenue growth: ○ Retail highly dependent on COVID restrictions. New capacity ramp up over the course of the year from 3 new UK CFCs ■ Bristol to open in 1Q21 ■ Andover and Purfleet to open in 4Q21 ○ UK Solutions & Logistics double digit growth ■ ramp-up of new UK capacity ○ Inter
Slide 15: Outlook for 2021
Outlook for 2021 ● EBITDA: ○ Covid-19 will continue to have a significant impact ○ £30m additional costs due to accelerated investment in technology and platform, including acquisitions of Haddington Dynamics and Kindred Systems ○ Retail dependent on COVID restrictions and impacted by additional cap
Slide 16: Ocado Group in a post Covid-19 world
Ocado Group in a post Covid-19 world Tim Steiner CEO 16
Slide 17: Millions of new customers now shop for grocery online
Millions of new customers now shop for grocery online Channel shift to online grocery is sticky Customers will look for the best experience Many customers that have tried online Globally, consumers value similar things, grocery intend to continue post pandemic though relative emphasis may vary Conve
Slide 18: OSP is setting the benchmark for customer experience
OSP is setting the benchmark for customer experience Ocado.com sets the bar in Our partners are replicating Strong customer metrics lead terms of customer service these metrics in their markets to strong customer retention A leading customer offer Early NPS scores are a positive Customer satisfactio
Slide 19: 'Our Ocado platform is incredibly resilient' Melanie Smith
‘Our Ocado platform is incredibly resilient ’ Melanie Smith - CEO, Ocado Retail 19
Slide 20: 'We have achieved best in market metrics' Michael Medline
‘We have achieved best in market metrics’ Michael Medline - CEO, Sobeys 20
Slide 21: 'We have partnered with Ocado because of their world-leading technology'
‘We have partnered with Ocado because of their world-leading technology’ Rodney McMullen - CEO, Kroger 21
Slide 22: Only OSP can deliver the best customer experience
Only OSP can deliver the best customer experience Online Retail Experience Technological expertise End-to-end integration 20 years as a pure play >750 patents granted and Most advanced solutions in tackling unique complexities pending on proprietary tech eCommerce, Fulfilment and of online grocery f
Slide 23: 'Solving technology problems to create the best customer experience'
‘Solving technology problems to create the best customer experience’ James Matthews, CEO, Ocado Technology 23
Slide 24: 'We are helping our grocery partners serve more customers online, faster'
‘We are helping our grocery partners serve more customers online, faster’ Luke Jensen, CEO, Ocado Solutions 24
Slide 25: Seven partners live in 2021
Seven partners live in 2021 CFC opening CFC Additional CFCs ISF live or roll Enabling online Live in 2021 plans on track progress update announced 2020 out by 1H21 growth with OSP CFCs 3 (rebuild)/5/6 live in 1Q/4Q21 n/a Return to CFC4 1Q21 n/a n/a Ramping CFC1, planning CFCs 2/3 Ramping CFC1, build
Slide 26: Accelerating ramp of live capacity for international partners
Accelerating ramp of live capacity for international partners CFCs - live modules Includes >10x increase in live ● CFCs publicly announced CFC modules vs FY20 to date does note include ● UK capacity ● Optionality for amends to ramp plans ● ISF capacity We are are in the initial stages of a significa
Slide 27: 17 CFC sites currently under construction
17 CFC sites currently under construction Groveland, Florida, USA Stockholm, Sweden Bristol, UK Montreal, Canada Melbourne, Australia Source: Company information 27
Slide 28: OSP: a multi format ecosystem to win in online grocery
OSP: a multi format ecosystem to win in online grocery "The OSP is a uniquely flexible platform which allows partners to meet the full range of customer missions. Standard-sized CFCs enable our partners to access to the largest part of the market and generate the best economics. With the standard-si
Slide 29: Mini CFCs: building further ecosystem flexibility for partners
Mini CFCs: building further ecosystem flexibility for partners Enabling partners to serve the full offer to more customers, faster First mini sites launching soon for partners Augmenting ecosystem flexibility Bristol CFC to go live at the end of February 1. Serving a full grocery offer to less dense
Slide 30: Micro fulfilment: a winning solution for convenience missions
Micro fulfilment: a winning solution for convenience missions Serving more customers Our model enables leading We are accelerating in the UK, and expanding wallet share economics for immediacy and see a big global market Zoom increases share of wallet Tackling a higher cost mission Search underway f
Slide 31: Additional flexibility through ISF
Additional flexibility through ISF Many partners are taking Greater flexibility A scalable software solution advantage of this flexibility Meeting partners’ immediate >8x increase in ISF volumes 5 partners live with ISF in 2021 and long term needs served for partners in 2020 Live in over 400 stores
Slide 32: 'We are ready to ramp' Mark Richardson
‘We are ready to ramp’ Mark Richardson, COO, Ocado Group 32
Slide 33: Ready to ramp as fast as our partners need to
Ready to ramp as fast as our partners need to Innovation and collaboration We have the resource to We have the experience to ramp improves each successive launch ramp up as fast as needed up at speed with quality execution Learnings to build on from Third party contracts bring We have ramped Erith t
Slide 34: Reducing the cost to serve with continuous improvements
Reducing the cost to serve with continuous improvements 2016 2018 2020 Andover roll out Erith roll out International roll out MHE Easier to maintain Easier to maintain Proprietary design, and manufacture and manufacture modular, future proofed 2nd gen bot: 25% new parts 3rd gen bot: 75% new parts So
Slide 35: Reducing the cost to serve: accelerating robotic picking
Reducing the cost to serve: accelerating robotic picking Acquisitions materially accelerate our progress towards solving robotic pick challenge Unmatched breadth of handling characteristics in grocery demand highly sophisticated solution Proven solution (GM, logistics) Developed capabilities and Dex
Slide 36: Robotic picking expands our core opportunity
Robotic picking expands our core opportunity Channel shift means large runway for growth Robotic picking is transformative for partners and us Grocery is the largest retail market globally 1.7% potential cost benefit means a better solution for partners, driving a bigger opportunity for us £7.6tn gl
Slide 37: Creating more value adjacent to and outside of grocery
Creating more value adjacent to and outside of grocery Staying ahead of the curve; investments in Leveraging our technology expertise transformational change related to core mission for disruptive change in other verticals Exciting progress: readying to seize the The potential market for robotic acc
Slide 38: Conclusion
Conclusion ● Over the last twelve months, the world has changed. Millions of customers have tried shopping for grocery online for the first time and they like the experience. The landscape of grocery retailing worldwide is changing, for good ● In a post-vaccine world, customers will, however, become
Slide 39: Q&A
Q&A To participate use dial-in details +44 (0)330 336 9411 and confirmation code 1505296 39
Slide 40: Appendix: Changes to cost allocation in Solutions segments
Appendix: Changes to cost allocation in Solutions segments EBITDA £m Retail UK Intl Other Elim Group ● Central Group costs that are not directly attributable to individual segments are Solutions allocated using a group allocation key. Financial Year 2019 ● In the second half of the year, a detailed
Slide 41: Appendix: IFRS 16 impact FY19
Appendix: IFRS 16 impact FY19 Retail UK Intl Other Elim Group Solutions Revenue £m Pre-IFRS 16 1,618.1 584.5 0.5 9.8 (456.3) 1,756.6 IFRS 16 impact - (8.5) - - 8.5 - Capital contributions from UK retail partners that are not recognised as revenue under IFRS 16 Reported Revenue 1,618.1 576.0 0.5 9.8
Slide 42: Appendix: IFRS 16 impact FY20
Appendix: IFRS 16 impact FY20 Retail UK Intl Other Elim Group Solutions Revenue £m Pre-IFRS 16 2,188.6 663.0 16.6 - (536.4) 2,331.8 IFRS 16 impact - (8.7) - - 8.7 - Capital contributions from UK retail partners that are not recognised as revenue under IFRS 16 Reported Revenue 2,188.6 654.3 16.6 - (5