Ocado Group plc

Good morning, everyone.

It's a pleasure to be with you here today and welcome you to Ocado's 2026 first half results. For disappointed England football fans in the room, I can confirm that there are no immediate plans for us to develop our business in Argentina. Before we kick off in earnest, I did want to reflect briefly on last week's announcements about succession planning at Ocado. I appreciate that there's been a lot of public speculation and commentary on this topic over recent weeks. We've announced a clear succession plan that gives certainty to everyone connected with the business and that allows us now to focus on on our full attention on executing our strategy and continuing to deliver for our shareholders and partners. So with that in mind, I hope you'll understand that's all we'll be saying on the matter this morning. Today is about our strategy, updating on our strategy, the progress we're making with our clients and our reinvigorated commercial focus worldwide. I'm going to hand over to Tim shortly, who will take you through the highlights, but I first wanted to reflect briefly on a few key items of progress that we're making towards important goals for Ocado at this midpoint of the financial year. Firstly, following the significant organisational changes at the end of the large R&D cycle that we talked about, we remain on course to turn cash flow positive during the second half of the year, with the expectation of being cash flow positive for the full year of FY27. This remains a very important goal for the business, creating a sustainable financial platform, and I'd like to thank everyone across Ocado who's been impacted by the changes made in the last few months, and as well as those who have worked hard to implement them. Today, Ocado's structure is simpler, more efficient, and puts us in the best possible position to grow effectively with our clients in the coming years. As Stephen will reflect, we expect the significant impact of those changes to come through in earnest in the second half, and you'll see the detail of that in his presentation. Secondly, we are starting to see commercial benefits of this simplified and focused commercial structure, with good momentum in our OSP business and new exciting partners signed in in the last six months. This reinvigorated commercial focus alongside the ending of exclusivity in many markets worldwide and our revolved solutions offering are allowing for a step change in the level of commercial engagement. And I'm excited that we're going to be joined by Nick de la Vega later to provide some insights on that commercial activity. So overall, we're confident that Ocado is in a strong position to grow with our existing partners worldwide and to bring our much evolved solutions to a wide range of new clients. And with that, I'll hand over to Tim to take us through the first half highlights.

Good morning, everyone. Today, we'll be starting with our strategic update, which is also going to include a update from Nick to provide his feedback on what we're hearing from the industry. Now he's eight months into the role. So let's start with the first half highlights. I wanted to start with the growth in international volumes, which remains extremely strong at 27%. In fact, marginally above the number we talked about at the full year. The number excludes the CFCs that were closed at Kroger and Sobeys, which took the decision not to proceed with those sites that were underutilized. That 27%, therefore, represents the underlying growth that we're seeing in the international business, which will ultimately correspond to an increase in revenue. At the moment, because we still have unutilized capacity in a number of those facilities, has corresponded to a 5% revenue growth. A number, as I say, we expect to accelerate as more and more partners hit the drawn capacity in those sites. Secondly, that strong underlying growth is due to be reinforced with new OSP wins. And you'll already have seen, obviously, our recent partnership with ASDA. We expect more to come in that space. Thirdly, as you know, our target of turning cash flow positive during financial year 26 is an absolute core goal for the business. And we're on track to reach this target in the second half following the significant organizational changes we've gone through in the last month, few months. And Stephen's going to talk more about this in numbers when we get onto his section. and finally we've sharpened our focus on new business in this first half following the key changes to the commercial teams as well as to the end of exclusivity in markets around the world. We're now engaged with multiple retailers across a range of markets with a very healthy prospect pipeline. Nick we're going to update us more on those conversations in a few minutes. Firstly though I'd like to pick up on the point about the strong volume growth. We're seeing it across the board. You've already seen in the R&S the numbers for Ocado Retail, where we've driven exceptional growth at 15% year on year. It's driven by a world-leading and constantly improving customer offer. And Ocado is currently using more modules than the original design capacity of their warehouses, and that is growing month on month. But our growth is not limited or isolated to the UK. Underlying growth across our international operations is extremely strong at 27% year on year. It reflects both the growth of the channel overall, but also reflects the market leading proposition that our clients are bringing to the market with Ocado. They are outgrowing, but in their markets. And I wanted to call out a few examples because it shows that recent OSP partners have gone live and they are delivering particularly strong growth in their markets on the platforms. So to highlight a few, in Madrid, Alcampo CFC has seen growth of 65% year on year, with a perfect order rate of 97%. And these are both exceptional numbers and show that CFC as a key driver of market share for Alcampo in Spain's capital city. Moving on to Poland, Ocean Poland have been live with manual fulfillment software in stores since 2024 and last year they launched an automated CFC near Warsaw. They're already seeing their perfect order rate from the CFC reaching up towards a very high steady state number. The site is also delivering strong growth and is very close to reaching its original drawn capacity and I expect it to be drawing down additional capacity this year. They announced a 21% year-on-year growth across the network, including the ISF and stores, and that growth is significantly higher in Warsaw, utilizing the CFC and the superior customer performance from it. In Japan, E.ON have seen really strong year-on-year growth at around 70%, following very strong engagement with our partner success teams, and their perfect order execution is also exceptional. and finally Coles are continuing to drive strong growth. They like to keep their numbers for their own presentations, but they have got some nice quotes in here to explain some of their results using the platform, driving strong growth in Sydney and in Melbourne and driving phenomenal customer reaction to the service out of the CFCs. So bigger ranges, better availability, improved freshness, and obviously seeing the CFCs outperforming their already very impressive growth numbers. So you can see that we've really applied key lessons that we learned from some of our earlier deployments. We've got a laser focus on driving the dual benefit of strong sustained growth in the CFCs as well as a consistently market beating customer offer. wanted to talk more about the flexibility of OSP. And I know we've shown you this before. It does continue to expand in terms of what we're capable of doing. Our platform has evolved massively since we started to establish our early exclusive partnerships. Today, it's much more flexible, more modular, broader, and easier to integrate than ever before. And hopefully you can see this from the slide. Today, we can serve every lead time from one hour, same day, as well as more longer scheduled. We can pick that in a variety of different ways. We can take those orders directly on client CFCs, ones provided by OSP or from aggregators. And then we can deliver in a hugely different manner of ways and with new things being added all the time, like our Dawn deliveries that will be going live soon in the Korean market. So I wanted to spend some time showing you how this plays out in practice. Let's start with our newest announced partnership at Asda. We're super excited about this one, in part because once we're live and at scale with Asda, our platform will be powering the online operations of three of the five largest grocery operators in the UK. But I'm also excited about what it demonstrates about what our platform can do for a retailer like Asda today. Firstly, we expect to serve customers across every lead time with Asda, from immediacy through to next day. Secondly, they'll be able to benefit both from our market-leading webshop solution for Asda.com, as well as the ability to serve customers shopping on a whole range of aggregator platforms, such as Deliveroo, Uber Eats, and Just Eat Takeaway, as well as and aggregate those orders together and have them all fulfilled through the Ocado technology. And thirdly, they're able to get on our system quickly with our AI-powered in-store software solutions due to be rolled out across their already sizable online business from next year. This speed onto the platform is really important to Asda. And last, they'll be able to operate a range of last mile options from direct home delivery through to courier-based deliveries and to click and collect. We're helping them reach their customers in a huge variety of ways with the best possible offer and we want to see them return to significant online growth. Moving on to Korea, to Lotte. Across to the other side of the world, we're about to go live with our first CFC in Korea, very imminently. This CFC is going to deliver a number of firsts for Ocado. It's the first international CFC to go live with our proprietary autofreezer solution, for instance. Practice the first CFC anywhere to go live with it, as well as with multi-temperature totes. But I want to take a step back and look at the whole platform they'll use too. Firstly, they'll be able to offer both next day and same day options, but with an important career specific variant that I'll come to. Secondly, we'll be supporting them both with their own e-commerce channel, as well as via aggregators again in the market, They'll be using automated CFC solutions as well as in-store fulfillment, which has already gone live. And as I mentioned, the CFC is going to have More automation than any CFC before with the introduction of our auto freezer. And finally, on the last mile options, we'll be launching dawn delivery for the first time in Korea. It's a really interesting and widespread practice in the market there representing more than 50% of the delivery market with shoppers wanted packed delivery at their home left outside the door before 7 a.m. It's a great example of how we can flex the platform and deliver options to suit a wide range of differing markets and differing customer preferences around the world. Moving on to Coles. Many of you will be familiar with Coles, but as a quick recap, Coles had a substantial existing business based on manual fulfilment and wanted to shift their volumes in Victoria and New South Wales into more efficient fulfilment and also to deliver better proposition to their customers. So we've launched CFCs in both markets, that have enabled that shift into the automated fulfillment, which have already generated very significant growth and a massive improvement in the customer satisfaction I spoke to earlier. In the last few months, Coles have also began to roll out same day orders from those sites too, with a Cardo Swift router opening up more optionality in their automation powered offer to their customers. And we hope to see more growth in the market in Australia. and finally moving on to Ocado Retail which continues its consecutive run as the UK's fastest growing retailer. Ocado Retail really shows what's possible with OSP in terms of growth, customer offer and profitability. It demonstrates the huge flexibility of the platform today in terms of lead times, fulfilment offer and last mile optionality. Having completed the full switch over to OSP last year, we're already seeing huge benefits from the business being on our latest platform, including the ramp of same day orders across the UK and big efficiencies in last mile. As a case in point, the software upgrades we've made in our last mile routing alone have delivered a significant increase in efficiency. For instance, the software changes mean that we will run 80,000 fewer routes this year for the same number of orders.