Ocado has secured a significant new agreement to construct a large robotic warehouse for an unnamed European retail chain, providing a much-needed boost to the UK-based technology firm.
Shares in the retail technology company surged by as much as 10 per cent on Tuesday following the announcement.
This timely deal comes after Ocado’s shares plummeted to a 13-year low last week, following a disappointing half-year financial update.
The company informed investors it has sealed an agreement to build a large customer fulfilment centre for a “fast-growing European national retailer”.
While the specific retailer was not named, the automated warehouse site is projected to go live in the 2028 financial year.
The facility will incorporate new Ocado technology, including its robotic picking product and fully automated freezers.
Tim Steiner, chief executive of Ocado Group, said: “I’m delighted that Ocado’s world-leading automation and robotics have been chosen to help drive forward the online operations of another leading retailer.
“Together with our agreement with Asda earlier this year, this partnership highlights the growing demand for our solutions across the breadth of our technology offering.”
The deal is not expected to have a “material” impact on its financial results for the current financial year.
It comes after two major supermarket chains, Kroger in the US and Sobeys in Canada, said earlier this year that they were planning to shut a number of their robotic warehouses operated by Ocado amid weak consumer demand.
Last week, Ocado said it has held talks with potential new partners, including “live engagement” with potential partners in the US.
The expiration of several exclusivity agreements has opened doors for the group, enabling it to intensify its search for “multiple new grocery prospects” across North America, Europe, and the Asia Pacific region.
The company also revealed on Thursday that one-off fees associated with these closure plans actually contributed to an uplift in its revenues and earnings over the last six months.
It revealed that group revenues jumped by 54 per cent to £1.04 billion for the six months to 31 May, compared with a year earlier.
This was heavily linked to £354 million in fees and other revenues connected to the proposed closures.
Revenues were only 1 per cent higher after stripping out the one-off impact of the closures.
Meanwhile, earnings before tax lifted to £17 million, compared with a £173 million loss a year earlier.