AO World PLC (LON:AO), the UK’s most trusted electrical retailer, has announced its unaudited financial results1 for the six months ended 30 September 2024.
The period saw continued delivery of strong revenue, profit and cash generation growth.
| £m1 | HY25 | HY24 | Mvmt |
| Total revenue | 512 | 482 | 6% |
| B2C Retail revenue2 | 382 | 339 | 13% |
| Operating profit | 16 | 15 | 11% |
| Adjusted profit before tax 3 | 17 | 13 | 30% |
| Basic earnings per share (EPS) (p) | 1.94 | 1.64 | 18% |
| Free cashflow4 | 14 | 3 | 320% |
| Net funds 5 | 38 | 16 | 147% |
Financial highlights
· Adjusted profit before tax and EPS continue to grow faster than revenue, as planned.
· Continued progress on profit performance – adjusted profit before tax of £17m, up £4m or 30% YoY, delivering a PBT margin of 3.3% (HY24: 2.7%).
· Gross Margin growth to 24.4% (HY24: 23.5%) driven by continued efficiency savings, which have more than offset inflationary pressures and the impact of reduced basket value in the retail business as a result of lower market product pricing.
· B2C Retail revenue growth of 13% despite a tough market over the summer because of lower product pricing and weaker demand for cooling products. Overall group revenue growth of 6% reflected reductions in B2B2 and mobile as we rebase towards profitability.
· Free cashflow of £14m (HY24: £3m) driven by strong operating performance and efficient working capital management. Revolving Credit Facility increased and extended with the total facility increasing from £80m to £120m and now expiring in October 2028.
Operational highlights
· Continued momentum in building our Five Star member base, with our first two year members now renewed. We continue to invest in Five Star and give our members even more reasons to shop with us across all categories.
· Our third-party warehousing solution for small products went live in April. This will improve our unit economics enabling us to offer a wider range of products and, in turn, give our customers, particularly Five Star members, even more reasons to buy from us.
· Customer satisfaction scores remain outstanding: Trustpilot 6 reviews have grown to over 600,000 averaging 4.8 out of 5 stars – further cementing AO as the UK’s most trusted electrical retailer.
· musicMagpie acquisition will augment our capability and value capture in the mobile and consumer technology categories as well as improving our ESG credentials.
· Post period end, renewed network agreement with Three, and extended our Domestic & General agreement in relation to the sale and promotion of product protection plans to December 2033.
· Significant progress made in mobile, with improved margins and acquisition costs but overall market down year on year.
· Further capex investment in our Recycling facility including the addition of an extruder to the plastics plant which will both increase our in-house capability to refine the plastic output and is critical to our ambition of creating new fridges from old ones.
· Our focus on cost continues and during the period we have delivered improved unit economics for warehousing small items. This has enabled us to expand our range of products and give Five Star members more opportunities to buy.
Outlook
Current year guidance is:
· Adjusted profit before tax3 upgraded to between £39m and £44m.
· Group revenue of £1.09bn to £1.13bn with growth >10% in B2C Retail
· Capex of c£11m
Following the Budget in October 2024, our estimate of the annual impact is an additional c£4m of direct costs but, including indirect costs where the impact remains to be seen, this will likely be more than £8m. We will work hard to mitigate the impact of this to overall profitability.
AO World’s Founder and Chief Executive, John Roberts, said:
“I’m delighted to report another successful six months for AO during which our main B2C Retail business has returned to double digit growth alongside making more progress towards our medium-term ambition of delivering a PBT margin of over 5%.
“We’ve had a Morecambe and Wise summer sales period; all the right volumes just not in the right categories. The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned. Overall, our team did a fantastic job to play this out as a satisfying score draw.
“We also made good progress beyond our core MDA category, and I’m very encouraged with how our customers and members are responding to our improved range and value proposition in newer categories.
“Our laser focus on costs and efficiency remains which ensures, as planned, that profit grew faster than sales on the growth we’ve delivered.
“Reflecting our truly world class customer service, AO.com has now surpassed 600,000 Trustpilot reviews with an overall score of 4.8 out of 5. We’re also giving our members even more reasons to shop with us.
“None of this has happened by accident and I’m grateful to the entire AO team, our suppliers and partners for their continued support and hard work.
“We’re now well into peak trading with customers responding positively to the thousands of unbeatable deals we’re offering for the Black Friday period”
Webcast details
An in-person results presentation and Q&A will be held for analysts and investors at 09:00 GMT with registration opening at 08:30 GMT today, 26 November 2024 at our Hatton Garden office. Advance registration, prior to arrival, is required by emailing [email protected]. A playback of the presentation will be available on AO World’s corporate website at www.ao-world.com shortly afterwards.
