Ocado Group has announced a deal with McKesson Canada to provide automated fulfilment technology at a distribution site. This marks a new milestone for Ocado as it expands its technology into the healthcare distribution and logistics sector. The deal involves selling Ocado's proven warehouse fulfilment technology and providing the necessary AI-powered software applications to operate the technology long term. McKesson Canada is a leading healthcare provider and the largest pharmaceutical distributor in Canada.
Tim Steiner, CEO of Ocado Group, expressed excitement about bringing the benefits of Ocado's technology to the healthcare sector. He highlighted that Ocado's technology is well-suited for supply chains that require dense storage, accurate inventory management, and secure stock control. Steiner also mentioned that the expansion into Canada is a positive development for the company.
In terms of the financial impact, Ocado will receive upfront fees during the construction process and a final payment upon installation. The company will also receive an ongoing annual fee for servicing and maintaining the technology. The transaction is expected to have minimal impact on cash flow and earnings in the current financial year. It is described as a capital light deal that will be cash neutral during the development phase and cash and EBITDA positive in FY25 when installation is complete.
Ocado Group is a UK-based technology company that provides online grocery fulfilment solutions to major retailers worldwide. It holds a 50% share of Ocado Retail Ltd in the UK in a joint venture with Marks & Spencer. The company has invested in various technologies, including robotics, AI, machine learning, simulation, forecasting, and edge intelligence.
Overall, this deal with McKesson Canada allows Ocado to expand its fulfilment technology into the healthcare sector and marks a positive development for the company's growth.