leadf
logo-loader
viewAO World PLC

AO World expects permanent change to market as it swings to interim profit

Founder and chief executive John Roberts said that online is now the dominant channel for customers and manufacturers

AO World PLC - AO World expects permanent change to market as it swings to interim profit

AO World PLC (LON:AO.) said it expects its market to change permanently after swinging to an interim profit thanks to the accelerated shift to online shopping during the pandemic.

The FTSE 250 firm experienced a strong increase in demand as people were forced to stay home during European lockdowns.

READ: AO World forecasts revenue jump in first half as pandemic accelerates shift to online shopping

The retailer’s founder and chief executive John Roberts said that online is now the dominant channel for customers and manufacturers and the company’s market has “changed as a result, forever”.

Growth rates increased from the second to the third quarter after resolving capacity constraints.

As a result, the full integration of AO Mobile was delayed to next year to focus on fulfilling demand in the core retail channel.

The gross margin of the mobile channel was hit by a change in customer behaviour, with increased cashback redemption rates and cancellation of contracts.

Meanwhile, recycling operations are now back to normal levels of operation and consistently at full capacity after they were temporarily scaled back during the first lockdown, although prices have been volatile since March.

The German business has made “considerable” progress and is forecast to be profitable from financial year 2022.

In the six months to September 30, the washing machine and laptop seller swung to an £18mln profit before tax from a £6mln loss last year, while revenue shot up 58% to £100mln. Net debt was cut by 75% to £20mln.

"AO has seen a permanent upshift in its market position, online penetration rates have increased and AO will end the year with a materially stronger active customer base, underpinning future growth," analysts at Peel Hunt noted.

"While there is no roadmap for further European expansion, AO appears much more determined to deliver well-thought-out and costed European growth, while also focusing on the huge German opportunity in the short term."

Shares succumbed to profit-taking and lost 5% to 397p on Tuesday morning.

--Adds analyst comment, shares--

Quick facts: AO World PLC

Price: 291 GBX

LSE:AO.
Market: LSE
Market Cap: £1.39 billion
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

HempFusion submits application to the Uk’s Food Regulatory body for product...

HempFusion (TSE: CBD- OTCQX: CBDHF) CEO Jason Mitchell joined Steve Darling from Proactive to share news the company has submitted its dossier to the United Kingdom's Regulatory Food Safety Agency. Mitchell telling Proactive the first step in the United Kingdom’s regulatory approval process...

6 hours, 34 minutes ago

2 min read