Revenue growth for AO World plc as operating loss widens

Online electrical retailer AO World plc has achieved revenue growth it its latest financial results.

Sales for the 12 months to March 31 2018 grew 13.6% to £796.8m, with UK revenues accounting for £680.8m of the total and Europe generating £116m.

While the Bolton-headquartered company’s European arm continues to operate at a loss, AO has a strategy in place to achieve profitability on the continent by FY21.

The firm’s UK business made an operating profit of £11.6m, down from £15.6m the year previous. In Europe AO recorded a £27.8m operating loss, compared with a loss of £27.6m in 2016/17.

Together, the figures mean that AO made an overall operating loss of £16.2m. Last year, the firm’s operating loss was £12m.

In the UK, AO mainly attributed the figure to higher marketing costs in the first half of the year and a “consistently competitive” pricing environment.

AO chief exec Steve Caunce said: “FY18 has been another year of good progress for AO.

“We have continued to successfully launch new categories across our territories, and our UK recycling facility became fully operational, building upon our vertically integrated infrastructure.”

He continued: “In the UK we have maintained market share in our core UK MDA business in a very competitive market and have performed well in the second half of the year with limited marketing expenditure demonstrating the asset of our customer base as it repeats and recommends AO.

“Our European operations continue to build scale and confidence as we remain on track to achieve our FY21 profitable run-rate objective.”

Speaking further, Mr Caunce said the new financial year “has started well” in both the UK and Europe “with UK revenue growth returning to double-digit levels against prior year”.

He added: “Whilst we remain cautious on outlook given economic and competitive pressures on the UK electricals market we are confident of achieving our stated goals of future growth in the years ahead.”