27th Jun 2024 13:36
(Alliance News) - Currys PLC offered grounds to be optimistic going forward, though its shares struggled following annual results, perhaps hurt by the absence of a guidance lift.
Revenue in the year ended April 27 fell 4.5% to GBP8.48 billion from GBP8.87 billion.
It swung to a pretax profit of GBP28 million, from a loss of GBP462 million.
Its bottom line was aided by the non-repeat of a GBP511 million non-cash impairment charge booked last year in its UK & Ireland operating segment.
This time around, UK & Ireland revenue declined 1.9% to GBP4.97 billion. Nordics revenue was down 7.9% to GBP3.51 billion.
"Our performance continues to strengthen. We've kept up our encouraging momentum in the UK&I, our Nordics business is getting back on track, and we're stronger financially," CEO Alex Baldock said.
"Encouraged as we are by our progress, we know we can go further. For one thing, we expect AI-powered technology to be the most exciting new product cycle since the tablet in 2010. With our partnerships, scale and expert colleagues to demystify AI, we're best-placed to benefit."
Like last year, it decided against a final dividend.
Currys added: "Currently, the group continues to benefit from the relaxed bank covenants and lower pension contributions that were negotiated in spring 2023, although pension contributions will increase to GBP50 million this year, and capital expenditure will rise back towards normalised levels. In this context, the board has taken a prudent decision not to declare a dividend at this year-end. Providing trading is in line with expectations, it is the board's intention to announce a recommencement of shareholder returns during the next twelve months." Currys said trading in the early weeks of the new financial year "has been in line with expectations".
Looking ahead, the company said trading at the start of the new financial year has been in line with expectations, as it anticipates profit and free cash flow growth. Further, it targets continued growth in high margin and recurring revenue services, aiming for at least two million iD Mobile subscribers before year end.
Hargreaves Lansdown analyst Guy Lawson-Johns commented: "After a year of takeover talk in what has been a tough trading environment, meeting guidance with a 10% rise in full year profit should be considered a good result. The continued recovery indicates potential easing of market headwinds and signal a cautious optimism for the future."
In March, Elliott Advisors UK said it did not intend to make a bid for Currys after having a 67p per share proposal rejected.
Currys had previously stated it felt the 67p offer "significantly undervalued the company and its future prospects," adding that the board unanimously rejected it.
JD.com Inc, another suitor, had also pulled out of the running.
AJ Bell analyst Russ Mould commented: "After batting off takeover interest earlier this year Currys has enjoyed a strong run, with its shares moving comfortably ahead of the 67p bid which was on the table from US hedge fund Elliott in February.
"This context helps to explain the negative reaction to the company's full year results with investors perhaps disappointed at the lack of any further upgrades to guidance. Otherwise, this looked a solid set of numbers, with the Nordics business, a problem child of late, firmly back on track."
Currys shares were 4.8% lower at 72.40 pence each in London on Thursday afternoon.
By Eric Cunha, Alliance News news editor
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