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(Alliance News) - AO World PLC on Wednesday said it swung to an annual profit in the recent financial year despite a minor drop in revenue, attributing the improved performance to a "rigorous" programme to improve cash and profit generation.
The Bolton, England-based electrical retailer reported a pretax profit of GBP7.6 million for the year ended March 31, compared with a GBP10.5 million loss the previous year. Earnings before interest, tax, depreciation and amortisation increased by 90% to GBP40.9 million from GBP21.6 million, and the company swung to earnings of 1.13 pence per share following a 0.75p per share loss.
Shares in AO World were up 0.3% at 80.20p on Wednesday in London.
AO World said that revenue decreased by 17% to GBP1.14 billion from GBP1.37 billion. However cost of sales decreased to GBP900.3 million from GBP1.1 billion, and administrative expenses decreased to GBP226.4 million from GBP272.7 million.
AO World did not declare any dividends for financial 2023, unchanged from the prior year.
The company attributed its improved performance to a "strategic pivot" in the first quarter to focus on profit and cash generation, which it said "fundamentally realigned" the business. This comprised a "rigorous and wide-reaching programme" to optimise its cost base and simplify operations.
Steps taken by AO World to this end included introducing delivery charges to offset growing costs in its logistics business, terminating initiatives such as operations in Germany and housebuilding activities, optimising its cost base such as by reducing its office footprint, and reducing its employee headcount.
Looking ahead, AO World said it intends to focus on prudent investments in the business, taking advantage of market opportunities and leveraging "our growing and loyal customer base." The company expects to deliver an Ebitda margin of over 5% and return to "driving profitable, top line growth" this year.
"We are delighted with the demonstrable progress that we've made with the strategic realignment of AO towards profitability and cash generation," commented Chief Executive John Roberts. "The significant improvement in our profit performance speaks for itself and has been achieved by focusing on our core strengths and simplifying our operations, while still delivering the outstanding customer service for which we're famous.
"Looking ahead, we intend to continue with this focus whilst also retaining the flexibility to drive growth through disciplined investment at the right pace and at the right time."
By Emma Curzon, Alliance News reporter
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