An employee carries a collection crate at the Ocado Group Plc distribution centre in Dordon, U.K., on Friday, Dec. 16, 2016. Ocado provides home delivery of a wide range of products including food and drink, toiletries and baby, household, pet care, and holiday products.  Photographer: Chris Ratcliffe/Bloomberg
© Bloomberg

Online grocer Ocado beat profit forecasts in its full-year results, but the UK-focused company still reported little sign of a long-awaited deal to expand its business internationally.

While the company on Tuesday announced better than expected pre-tax profit growth of 21.8 per cent to £14.5m, analysts said the figure partly reflected the late completion of a warehouse in Andover.

“That is simply a delay,” said Bruno Monteyne at Bernstein, who added that depreciation charges associated with the new facility were likely to depress profits once it was in operation. Gross retail sales increased 13.6 per cent to £1.27bn as the group previously signalled.

Ocado has been promising for more than a year that it would strike a deal to run online operations for an overseas retailer.

On Tuesday, the web-based grocer tried once again to pitch itself as a technology company, trumpeting what it called a “major advance” in the development of a robotic picking arm capable of handling “sensitive and unpredictably shaped grocery items” without damaging them.

There was still no sign of the long-awaited deal, however. Mr Steiner could only report that the company expected to sign deals “in the medium term”, despite discussions with multiple companies.

Tim Steiner, Ocado chief executive, highlighted the strong progress despite “limited growth” in the wider grocery market, with many companies’ margins under pressure thanks to increased competition.

In August, Ocado had to strike a new deal with Wm Morrison after the supermarket complained that its initial agreement was too costly and restrictive.

Shares in the company have since suffered, as Amazon has looked to expand further into the already competitive UK grocery sector, extending its own tie-up with Morrisons, Britain’s fourth-biggest supermarket by sales.

Ocado is one of the most heavily shorted stocks on the London Stock Exchange, with more than 27 per cent of its shares tied up in bets against it, according to Markit data.

Shares in Ocado climbed as much as 7 per cent on Tuesday morning, the stock’s best trading performance in more than six months.

Analysts at Shore Capital were less impressed, however, arguing that “Ocado remains a business under profit pressure”.

“We really struggle with the multiples that Ocado’s shares trade on as, whilst it is shopper friendly, it is not so for shareholders,” they said.

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