Coles’ Victoria-based customer fulfilment centre (CFC) has been delayed due to construction issues, pushing the timeline out by a year and increasing the cost by tens of millions of dollars.
The supermarket giant said [pdf] it had been informed by online grocery technology company, Ocado, of delays in the handover of the planned CFC.
“Additional works are required to rectify construction issues with the grid identified during quality control processes for the Victorian CFC,” Coles said in a statement.
Coles initially said back in April it was making progress on its two Ocado-backed online customer fulfilment centres in NSW and Victoria.
At the time it said the Truganina, Victoria-based automated CFC was recruiting workers and leadership roles were already filled, while the Wetherill Park automated CFC in NSW was experiencing work delays.
It had initially been expected the Victorian CFC would be commissioned ahead of the NSW one, with no impact on the company’s estimated total capital expenditure of the project.
However, on Friday, Coles said that discussions with Ocado led to a “revised handover date”, meaning the Victorian CFC would now be delayed “with the incremental ramp up period now expected to commence in mid-FY25 (previously mid-FY24).”
The NSW CFC being built by Ocado is expected to have an incremental ramp up period commencing end 2H FY24 – previously the guidance was simply “2H FY24”.
“The impacts of the delays are likely to increase the project capital and operating expenditure by approximately $70 million and $50 million respectively, noting the additional capital investment will continue to be managed within the Coles capital expenditure envelope,” the retailer said.
“Total capital expenditure is now expected to be approximately $400 million of which 55 percent has been incurred to the end of FY23, with the balance expected to be incurred in FY24 and FY25.”
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