AO World PLC has reported robust financial performance for the six months ended 30 September 2024 (HY25), driven by strong B2C revenue growth and operational efficiencies.
Financial Highlights
- Total revenue: £512m, up 6% year-on-year (YoY).
- B2C Retail revenue: £382m, marking a 13% increase despite challenging market conditions.
- Operating profit: £16m, an 11% rise from HY24.
- Adjusted profit before tax: £17m, up 30%, delivering a margin of 3.3% (HY24: 2.7%).
- Free cash flow: £14m, surging 320% from £3m in HY24.
- Net funds: £38m, representing a 147% increase.
The company also saw improved gross margins, reaching 24.4% (HY24: 23.5%), supported by efficiency savings that offset inflationary pressures and lower average basket values.
Operational Progress
AO’s ongoing focus on customer satisfaction and operational excellence was reflected in key achievements:
- Customer trust: Over 600,000 Trustpilot reviews with an average rating of 4.8 out of 5.
- Membership growth: Expansion of its Five Star member base, with renewals from its initial cohort of members.
- Efficiency gains: A new third-party warehousing solution for small products launched in April, improving unit economics and enabling a broader product range.
- Strategic acquisition: The purchase of musicMagpie to bolster its mobile and consumer technology offerings while enhancing environmental sustainability goals.
- Recycling innovation: Investment in an extruder at AO’s recycling facility to refine plastics and support its circular economy ambitions, such as producing new fridges from old ones.
CEO John Roberts described the summer as a “Morecambe and Wise” season with “all the right volumes, just not in the right categories,” noting shifts in sales patterns due to the wet summer weather.
Outlook
AO has upgraded its guidance for the full year, now forecasting:
- Adjusted profit before tax: £39m to £44m.
- Group revenue: £1.09bn to £1.13bn, with B2C Retail growth exceeding 10%.
- Capital expenditure: Approximately £11m.
While acknowledging potential cost increases following the October 2024 Budget, AO plans to mitigate impacts on profitability through efficiency measures.
Roberts expressed confidence in the company’s strategy, highlighting the ongoing success of its customer-focused initiatives and cost discipline:
“Our laser focus on costs and efficiency ensures that profits are growing faster than sales. We’re now well into peak trading, with customers responding positively to our unbeatable Black Friday deals.”
AO remains optimistic about the remainder of FY25 as it continues to expand its product range, enhance customer experiences, and deliver strong financial performance.
Read AO’s statement here
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1 Unless otherwise stated all numbers relate to the continuing operations of the Group and therefore exclude the impact of Germany.
2 B2C (business-to-consumer) Retail revenue relates to products and services purchased by B2C customers through the retail websites (including membership fees and revenue attributable to protection plans sold with the products). B2B (business-to-business) Retail revenue relates to products and services purchased by B2B customers and also includes funding for marketing services provided to suppliers. See note 2 for further information.
3 Adjusted profit before tax is calculated by adding back or deducting adjusting items to Profit before tax. Adjusting items are those items that the Group excludes in order to present a further measure of the Group’s performance. Each of these costs are considered to be significant in nature and/ or quantum or are consistent with items treated as adjusting in prior periods.
4 Free cashflow is defined as the movement in cash and cash equivalents in the year excluding the cost of funding the EBT to acquire shares in the company.
5 Net funds is defined as cash less borrowings less owned asset lease liabilities but excluding right of use asset lease liabilities. Net funds includes any cash held in Germany.