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AO World extends losses as chief says ‘we can do better’

NAUEN, GERMANY - FEBRUARY 08: A worker assembles washing machines at the BSH Bosch Siemens Hausgeraetewerk Nauen consumer appliances factory, the world's third-largest appliance maker, on February 8, 2010 in Nauen, Germany. According to a recent study by international auditing and consulting firm Deloitte global demand for consumer products, including household appliances, remains strong despite the ongoing effects of the weakened global economy. (Photo by Andreas Rentz/Getty Images)

Electricals retailer AO World extended its losses in the 2018 financial year, its results showed today, as the firm’s earnings fell in Europe.

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John Roberts, the chief executive who in January took back charge of the company he founded, said: “We can do better”.

The figures

The Bolton-based company’s profit before tax fell 40 per cent to minus £18.9m for the year ended 31 March 2019, compared to minus £13.5m the previous year.

AO World’s revenue rose 13 per cent to £902.5m for the year, compared to £796.8m a year earlier, its results showed.

Its operating cash flows before movement in working capital fell to minus £3.6m from minus £2.9m.

The group’s net debt was £9.0m for the year ended 31 March, compared to net funds of £38.3m a year earlier.

AO World’s loss per share rose to 3.8p from 2.9p a year earlier.

Why it’s interesting

The results come after the electrical retailer warned in April that it expected to take a £2.5m hit over the coming year as it shakes up its management team, suggesting its worries are far from over.

Today’s full-year results showed that losses in Europe increased, which Roberts put down in part to problems with drivers in Germany and a lack of improvement in margins.

AO World delivered double-digit revenue growth in the UK, while its losses in adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) terms fell to £0.4m for the year to 31 March compared to £3.4m a year earlier.

What AO World said

Roberts, founder and chief executive, said: “The UK result was achieved against an ongoing tough trading environment and includes three months contribution from Mobile Phones Direct which we acquired in December 2018 and its integration continues to go to plan.”

He said the company has “made changes to the management of our international operations and are ensuring we utilise all the influence, intelligence and capability within AO”.

Read more: Let’s go: AO World’s chief executive departs with founder returning to the role

“Overall, the AO team deserve praise for their efforts in FY19 but we can do better and I’m pleased with the progress that we are now making in the first few months of this financial year,” he said.