2nd Jun 2015 10:39
LONDON (Alliance News) - AO World PLC Tuesday reported a narrowed pretax loss and rise in revenue in its recently-ended financial year, as it recovered from costs associated with its initial public offering in London the previous year but missed both its earlier financial expectations and revised analyst estimates due to a weaker-than-expected sales performance in the fourth quarter.
The FTSE 250-listed online domestic appliances retailer said it made a pretax loss of GBP2.9 million in the year to March 31, compared with a loss of GBP7.6 million the prior year, while revenue grew 24% to GBP476.7 million from GBP384.9 million, beating the estimate it gave in February of somewhere in between GBP470 million to GBP475 million.
However, these results were lower than AO World had hoped for earlier in the year, as it issued a profit warning back in February following a slowdown in sales growth in the last quarter. It said it faced a tough comparative with the final quarter of the previous year, which had been helped by extra publicity surrounding its initial public offering, and caused the company to lower its expectations for the full year.
Despite the profit warning, the GBP2.9 million loss still missed analysts' revised estimates. Numis had revised its forecast to a GBP1.1 million loss, while Shore Capital lowered its estimate to a GBP1.5 million profit ahead of Tuesday's results.
However, AO World added that it is encouraged by its progress over the first six months of trading in Germany and said that sales momentum is gathering pace. German operations finished the year with an annualised sales run rate of GBP19.8 million, based on GBP1.7 million monthly sales for March.
The company said that while set-up costs in Germany and costs incurred from exploring other European opportunities contributed to a GBP12.3 million loss in earnings before interest, tax, depreciation and amortisation in its European operations, cash generated from the UK exceeded the cash absorbed in Europe. UK adjusted Ebitda increased 47% to GBP16.5 million from GBP11.2 million, while overall group adjusted Ebitda was GBP8.5 million, down from GBP11.2 million.
Analysts at Shore Capital said the adjusted group Ebitda figure was ahead of its GBP5.7 million estimate, while Numis said it was encouraged by the group's progress in Germany.
Still, AO World is the second worst performer in the FTSE 250 Tuesday morning, down 3.5% at 170.00 pence.
"Our long-term plan is on track and, despite missing our financial expectations for the year, we have continued to take market share in the UK MDA market delivering significant growth in UK sales and adjusted Ebitda," Chief Executive John Roberts said in a statement.
"Our customer proposition remains strong - our unbeatable prices, huge range and amazing service mean our customer satisfaction levels have remained exceptional and we will continue to focus on this in the year ahead. The passion we have for our customers, staff and all other stakeholders has never been stronger and we still believe we can change the way Europe buys its electricals, simply by caring more and executing brilliantly," Roberts added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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