half-year losses widen by almost £10m

AO World

AO World’s losses has widened by almost £10 million, as the electricals retailer increased UK brand expenditure and investment in Europe.

For the six month period to the end of September, AO World’s total operating losses stood at £12 million, compared to the £2.8 million recorded during the same time last year.

However, the retailer’s total revenue for the half year period jumped 13.3 per cent to £368 million as growth continued in both the UK and mainland Europe.

While AO World’s total sales for the UK increased 7.4 per cent to £316.8 million, its total European revenue skyrocketed 60.5 per cent to €58.1 million (£51.4 million) despite minimal traditional marketing activity.

The retailer also posted an overall adjusted EBITDA loss of £6.3 million, compared to the £1.5 million profit recorded in 2016.

In its UK market alone, adjusted EBITDA stood at £7.4 million compared to the £13.1 million recorded last year, impacted mainly by increased marketing expenditure.

Meanwhile, AO World’s adjusted EBITDA loss in its European market was €15.6 million (£13.8 million) compared to the €14.3 million (£11.6 million) this time last year as it continued to invest in expansion and build scale.

Chief executive Steve Caunce said the results indicated that AO World was on track to achieve its objectives in its “4C Strategy” and therefore has “made a good start to the year”.

“We are broadly on track with our plans for the year as a whole – with the positive impact of improving sales growth through the first half of the year combined with the first half biased phasing of our marketing spend – in spite of the challenging UK market conditions,” he said.

“Our European operations continue to perform in line with the plan we’ve previously set out notwithstanding the adverse impact of foreign exchange rates on our reported performance.

“The AO culture is firmly embedding in Germany and The Netherlands and our foundations for growth are fully established.

“We are also building a number of exciting new vertically integrated capabilities under the AO banner, including our state-of-the-art recycling facility in Telford.”

He added: “While we are mindful of macro-economic factors we remain confident that we are on track with our plans to be the best electrical retailer in Europe.”

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