Ocado - comment
Y23 results were ahead of our model and above the median of analyst consensus. Overall, we see the results as a positive development for the Tech Solutions business, and the end game for the ownership of the M&S JV is approaching. Tech Solutions has now turned to Adjusted EBITDA positive, which exceeded our model. Divisional capex was lower than we modelled, but 2024 guidance for sites and modules is in line with our model.
Ocado now expects the M&S JV to be deconsolidated in 2025. Marks and Spencer will want to buy the 50% it doesn’t own and take control (using Ocado’s logistics capabilities but running everything else themselves). The argument over the Contingent Consideration payment is a part of the price negotiation. Ocado now holds the payment at £28m (M&S has it at nil). M&S will buy out Ocado, with Ocado retaining a capacity payment (in line with its other grocery clients). We will update our view and model after the call (today at 0930 GMT)