AO reports continued revenue growth in latest financial results

AO World, the European online electrical retailer, has today announced its unaudited interim financial results for the six months ending 30 September 2018.

The company experienced continued revenue growth against a challenging backdrop and said it’s on track with its strategic plan. Total revenue for the period increased by 9.9 per cent to £404.2m (2017: £368.0m) against a continuingly tough macro trading environment in the UK and Europe and a declining UK MDA market.

Further financial highlights include: AO website sales for the UK were up 4.2 per cent to £294.3m (2017: £282.5m) with growth coming from newer categories. Total UK revenue was up 5.7 per cent to £334.8m (2017: £316.8m).

UK adjusted EBITDA of £6.9m (2017: £7.4m) was impacted by lower than anticipated MDA sales and the expected dilutive gross margin percentage impact of growth in our newer categories.

Group operating losses reduced to £11.7m, including exceptional costs of £1.4m incurred in relation to the proposed acquisition of Mobile Phones Direct Ltd.

The company further reported that its market share was maintained in its core UK MDA category with share taken in its newer categories in the UK and in all categories and territories in Europe. Customer numbers now exceed five million in the UK and approaching six million across all territories.

Regarding AO’s hi-tech plastics recycling site, the company reported that it is expected to be operational early within FY20 and plans for a second recycling plant are also underway.

And in relation to the proposed acquisition of Mobile Phones Direct Limited, which was announced recently, AO maintained this is conditional on shareholder and regulatory approval and it said this will further diversify its product offer and improve customer proposition through the offer of network contract sales in its Mobile Category.

Steve Caunce, AO Chief Executive Officer, said: “While our core UK and Germany MDA markets have been challenging, with the UK MDA market becoming tougher than expected, we take encouragement that we are at least maintaining market share in this core category in the UK and growing significantly in Germany.

“Elsewhere, our continued focus on growing our range of online electricals and adding new complementary ranges proved successful in the first six months of the year, with newer categories such as Audio Visual and Computing performing particularly well.

“Customers continue to love AO, as demonstrated through the satisfaction metrics which remain very strong, and awareness of the AO brand has further improved through the recent launch of our ‘Delivering Tomorrow’ campaign.

“Our peak trading period began on 9 November with the launch of our biggest ever Black Friday and I remain confident of achieving long-term sustainable growth across the Group.”