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UK online grocer Ocado has raised profit forecasts for its key technology division, sending shares in the group up by almost a fifth.
The company said on Tuesday that its technology business, which sells automated robots and software to supermarkets to help them boost their ecommerce operations, would achieve a profit margin in the mid teens, up from a previous forecast of more than 10 per cent.
The upgrade will go some way to allaying investors’ fears over the business, which has suffered a series of blows, including a decision by US supermarket chain Kroger to close three sites powered by Ocado’s technology.
It comes a day after analysts at Bernstein cut their forecasts for the group, which was demoted from the FTSE 100 last month.
Ocado, which also owns half of the UK’s online-only supermarket Ocado Retail, is also contending with falling sales after a boom during the pandemic.
The improving outlook for the technology business came alongside Ocado’s first-half results, which showed that its pre-tax losses narrowed to £154mn.
“We have come through an unprecedented period for online grocery, with multiple years of high food inflation following a surge in demand during the pandemic,” said chief executive and co-founder Tim Steiner. “The global channel shift to online has now resumed and Ocado is uniquely well-positioned to take advantage of the opportunity.”
Shares in Ocado were up 18 per cent in early trading on Tuesday but remain down by more than 40 per cent this year.
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