Ocado acquires two tech firms as M&S tie up proves fruitful

The retailer and tech firm has raised its full-year expectations for the group EBITDA to be over £60m, compared with its previous guidance of more than £40m.

Ocado, whose tie-up with M&S Food went live in September, has continued to see high demand with more customers shifting to online grocery shopping over the last few months. 

It said the growth trajectory was in line with the third quarter but also reflected the seasonality of the quarter in the run-up to Christmas.

Ocado has also purchased two robotics firms, Kindred Systems and Haddington Dynamics, in a bid to enhance its picking capabilities.

Kindred Systems, which it acquired for $262m (£203.7m) is a North American robotics solutions company that designs, supplies and services sophisticated piece-picking robots for ecommerce and order fulfilment.

Of its 90-strong team of engineers, half will join Ocado’s tech team, while the others will remain to drive the business’ growth.

Haddington Dynamics, which Ocado acquired for £25m (£19.4m) is a Las Vegas-based research company that specialises in the manufacture of low-cost, lightweight, highly dexterous robotic arms.

The two companies are expected to “accelerate the commercialisation of robotic picking”, fitting into Ocado’s fulfilment centres and those of its clients.

The purchases will have no financial impact on the current financial year and Ocado expects 2021 revenues to increase by approximately £30m as a result of the integrated systems with a small negative impact on EBITDA.

Ocado boss Tim Steiner said: “We consider the opportunities for robotic manipulation solutions to be significant, both for Ocado Smart Platform clients and across the fast-growing online retail and logistics sectors. 

“Ocado has made meaningful progress in developing the machine learning, computer vision and engineering systems required for the robotic picking solutions that are currently in production at our customer fulfilment centre in Erith. 

“Given the market opportunity, we want to accelerate the development of our systems including improving their speed, accuracy, product range and economics.

“I am delighted to be welcoming Kindred Systems and Haddington Dynamics to the Ocado group as we believe they have the capabilities to allow us to accelerate delivery, innovate more and grow faster.”

Ocado will give a fourth-quarter update on December 10.