1st Oct 2021 08:39
(Alliance News) - AO World PLC on Friday warned profit will fall this year as sales volumes are being constrained by supply chain disruption and the shortage of delivery drivers.
Adjusted earnings before interest, tax, depreciation and amortisation in the 2022 financial year, which ends March 31, are expected to be between GBP35 million and GBP50 million, AO said in a trading update. That's down from GBP64 million in financial 2021.
Shares in the online electrical appliances retailer were down 16% to 182.65 pence in London on Friday morning, the worst faller in the FTSE 250 index of mid-caps. In the year to date, shares are now down 56%. They had more than quadrupled in 2020 as the pandemic fuelled online shopping.
In the first half, revenue was up 5%. The UK saw 6% growth and Germany saw revenue in euros grew 3%, "despite the competitive online market". AO expects a similar rate of growth in the second half.
The challenging market in both countries "resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter," the Bolton, England-based company said.
AO was up against strong comparatives in the period. This time last year, sales boomed during lockdown. The company made GBP717.0 million revenue in the first half of financial 2021, a 58% year-on-year increase, and swung to a GBP18.3 million pretax profit.
Therefore, it's "more meaningful" to compare first-half earnings with the performance two years ago, which shows revenue up 66%, AO said.
"Whilst we continue to see industry-wide issues relating to ongoing supply chain disruption, we have implemented measures to help mitigate these challenges in our logistics operations," the company said.
Retailers including Next PLC have warned of shortages over the busy Christmas period. But AO said it is "well placed to meet customer demand in our peak third quarter sales period."
By Ivan Edwards; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
NextAo World