26th Nov 2024 10:06
(Alliance News) - AO World PLC on Tuesday warned of an increase in costs due to the UK government budget measures announced last month, as it reported a surge in interim profit.
The Bolton, England-based electrical retailer that specialises in home appliances and electricals reported growth in half-year earnings.
Revenue rose 6.3% to GBP512.1 million in the six months that ended September 30 from GBP481.7 million a year prior.
Pretax profit improved 23% to GBP16.2 million from GBP13.2 million.
Adjusted pretax profit spiked 30% year-on-year to GBP17 million, AO said.
Profit is growing faster than revenue, "as planned", it said.
"Following the budget in October 2024, our estimate of the annual impact is an additional [around] GBP4 million of direct costs but, including indirect costs where the impact remains to be seen, this will likely be more than GBP8 million," the firm explained.
AO World said it will "work hard to mitigate the impact of this to overall profitability".
PA on Tuesday reported that AO World Founder & Chief Executive Officer John Roberts said the company is likely to have to raise prices and make savings. He added that it was too early to say by how much prices are likely to rise, with the company also looking to use growth and efficiencies to counter the costs.
CEO Roberts added the summer sales period saw AO play out somewhat of a stalemate.
"We've had a Morecambe & Wise summer sales period; all the right volumes just not in the right categories. The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned. Overall, our team did a fantastic job to play this out as a satisfying score draw," Roberts said.
Roberts added: "We're now well into peak trading with customers responding positively to the thousands of unbeatable deals we're offering for the Black Friday period."
AO World upped its outlook for the current financial year ending March 31.
It now expects adjusted pretax profit between GBP39 million and GBP44 million, a rise of at least 14% from GBP34.3 million. It had previously expected adjusted pretax profit between GBP36 million and GBP41 million.
AO World shares fell 1.1% to 108.40 pence each on Tuesday morning in London.
By Tom Budszus, Alliance News slot editor
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