Dixons Carphone PLC (LON:DC.) released a pretty upbeat statement about its future after turning to a full-year profit.
The electricals retailer said the start to the financial year has seen continued strong trading and reckons its markets will be structurally larger post-pandemic.
READ: Dixons Carphone makes way for the equally inappropriately named Currys
In UK & Ireland Electricals, sales are up on last year with around half of them coming through stores, as expected.
In International, sales are trending positively against strong growth in the previous year.
The smartphones and washing machines seller said it expects to maintain a net cash position at year-end, with total capital expenditure coming in at £190mln and net exceptional cash costs of less than £100mln from £130mln previously guided.
The FTSE 250 group forecast to generate cumulative free cash flow of more than £1bn by 2024, with underlying earnings (EBIT) margin rising to 4% in the same period.
Total positive cash flow from UK & Ireland Mobile will be at least £200mln, it added, from the previously guided £125-175mln range, with the dividend also expected to grow.
The loss-making UK & Ireland mobile segment is expected to turn into “a smaller, but profitable, cash-generative and capital light category” by 2023.
In the year to 1 May, group revenue added 2% to £10.3bn, with UK & Ireland Electricals up 8%, international up 16% but UK & Ireland Mobile tumbled 55% due to enforced store closures because of COVID-19 lockdowns.
The group, soon to be renamed to Currys, turned to a £33mln profit before tax from a £140mln loss last year and to a £169mln net cash position from £204mln debt. It also restarted dividends with a proposed 3p per share payout.
Analysts at Liberum said the shares remain too cheap as the results "give further reasons to be positive on DC’s outlook and the ongoing progress under its transformation plan".
"Current trading will be an important focus for investors and this is encouraging with management noting a continued strong performance (UK&I electricals in growth year on year and international sales trending positively), alongside evidence that the group’s underlying markets will be structurally larger going forward, with not all last year’s sales being pull-forward," the broker said.
"Dixons Carphone’s enduring strong performance throughout the pandemic reflects the resilience of its market-leading Electricals offer, and particularly the strength of its online proposition, which we think has surprised the market."
Shares dipped 1% to 121.9p on Wednesday morning.
--Adds broker comment, shares--