AO World full-year profits top guidance
Online electricals retailer AO World posted a surge in full-year profit on Wednesday, topping its own guidance range as its plan to pivot the business to focus on profit and cash generation bore fruit.
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In the year to the end of March 2024, adjusted pre-tax profit jumped 186% to £34.4m even as revenue dipped 9% to £1.04bn. AO World had guided to profit coming in at the top end of a range of £28m to £33m.
AO said revenue was as expected "following the decisive actions taken to remove non-core channels and loss-making sales and returning to growth in Q4".
The company said it had strengthened its balance sheet, with overall liquidity of £116m as at the end of March, versus £89m in 2023, and net funds of £34.4m, up from £3.6m.
The retailer said that despite ongoing macroeconomic challenges, it still expects to deliver on its ambition for double-digit revenue growth in FY25 and adjusted pre-tax profit of £36m to £41m.
It also reiterated its medium-term guidance of adjusted pre-tax profit margin of 5%, double digit growth and earnings per share growing faster than revenue.
Founder and chief executive John Roberts said: "We have made good progress on our profit performance in FY24, which is a testament to the success of our strategic pivot to focusing on profit and cash generation.
"We are now a much simpler, more efficient business and are performing better than ever for customers, with excellent and sustainable unit economics.
"Our focus now is on delivering profitable top line growth with an ambition for double digit revenue growth in FY25.
"During the year we passed the milestone of 500,000 Trustpilot reviews, with an increased Trust score of 4.8 out of 5. This ranks AO as the leading and most trusted UK retailer for the combination of volume and quality and is an output of the amazing service we deliver every day for customers at scale."
At 0820 BST, the shares were up 3.6% at 117.06p.
Russ Mould, investment director at AJ Bell, said: "AO’s earnings have soared after a strategic decision to focus on profit and cash generation, rather than simply chasing market share at any price.
"Sometimes it can be the right decision to simplify everything and focus on profit and efficiency. It’s a good start but ultimately selling electrical goods is a low margin business so there is little room for error."