29th Apr 2022 10:59
(Alliance News) - Shares in AO World PLC crumpled on Friday with the online electrics retailer cautious on the year ahead amid supply chain issues and a squeeze on consumer incomes.
It also warned its full-year results announcement will be delayed and its Founder & Chief Executive John Roberts will be selling a "small proportion" of his stake.
Shares in AO World were down 19% at 70.95 pence in London on Friday. The stock has tanked 75% over the past 12 months.
AO World expects revenue in the financial year ended March 31 to be GBP1.56 billion, down 6% on the year before, amid "exceptionally strong prior year comparatives" due to the Covid lockdown-driven online shopping boom that year.
On a two-year basis, revenue has risen 52%, it highlighted.
"UK revenues remained resilient in H1 despite the constraints of driver challenges and ongoing supply chain shortages. During H2, while driver issues had eased, customer demand progressively weakened across the sector, compounded by global supply chain disruption which affected product availability in certain categories," said AO World.
It expects to generate adjusted earnings before interest, tax, depreciation and amortisation of just GBP8 million for the year amid higher costs in its UK logistics operations, driver shortages, and higher marketing costs in Germany.
Adjusted Ebitda in the 2021 financial year was GBP64 million, in turn up sharply on the GBP22 million generated in 2020.
Further, AO World warned of a potential hit to profit in the recently ended financial year due to higher warranty cancellations than average as customers respond to the cost of living crisis.
"We experienced a similar reaction following the first Covid lockdown period, which proved to be a temporary consumer adjustment," said AO World. "While the picture has subsequently improved, data received subsequent to this trading update and prior to the full-year results announcement scheduled for later this summer could result in a reassessment of the carrying value of the contract asset, which could lead to a material impact on FY22 profits."
Looking ahead, AO World said it is cautious on its outlook for revenue and profit in the near-term amid "volatile market conditions, inflationary cost pressures and logistical challenges in the supply chain, together with the escalating cost of living for consumers".
The company said the strategic review of its German business continues, and a number of options remain under consideration. As it continues this review, AO World said it expects to announce its full-year results "six to eight weeks later" than planned.
Finally, AO World said Founder & CEO Roberts has decided to dispose of a small part of his stake in the business "on an annual basis". The firm noted that since the group's IPO in 2014, he has maintained his shareholding and increased it with "selected" share purchases.
It is expected Roberts will sell off around GBP5 million worth of shares during the current financial year, representing around 5% of his total stake of 107 million shares, which is a 22% stake in the company. The 5.4 million shares this would involve were worth GBP4 million following Friday's price fall.
By Lucy Heming; [email protected]
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