Here are three things you need to know in the financial markets this morning from investment writer, Tony Cross.
#1. Deliveroo margins suffer as average sale size shrinks
There’s a solid enough set of full year results out from Deliveroo LON:ROO this morning that impress on most metrics, with the exception of the rather important one – profit. Orders rose by 73% although with revenues up by 57% that reflects smaller basket sizes and this also hit margins which declined by 120 basis points. Pre-tax losses grew some 40% to almost £300m. The company notes it is looking to reach break even in the next couple of years, but the challenge for many businesses is that as money becomes more expensive, investor patience may start to run thin.
#2. Average Ocado basket size falls despite food price inflation
A trading update for the 13 weeks to 27th February from technology/grocery delivery firm Ocado LON:OCDO has illustrated something of a mixed bag. Customer numbers are up but average shop sizes are down – this second metric being especially notable given underlying food price inflation. Revenues are however up 31.7% from the corresponding period pre-COVID, but there seems to be an acceptance that the next big influencing factors will be food price inflation, something that could well serve to dampen full year revenue growth although it’s still expected to end in double figures.
#3. Q4 return to profitability for Cineworld
Full year results from Cineworld LON:CINE are also out today, with the company having understandably seen a big bounce in sales as entertainment venues have been allowed to reopen. For the 12 months to 31st December, admissions were up by 75% whilst revenues more than doubled, although the business remained loss-making. Management do however note strong momentum especially in the final quarter, which recorded a return to profitability and cash flow generation.
