AO World PLC (LSE:AO.) has forecast top-end full-year EBITDA despite reporting increased losses and falling revenues in the six months to 30 September 2022
The online electrical retailer posted pre-tax losses of £12mln in the period compared to £4mln last year while revenues reached £546mln, down 17% from £661mln, reflecting a reduction in the overall electricals market, as well as actions taken to remove non-core channels and loss-making sales.
But it said the closing of its German operation quickly and efficiently had led to a minimal cash impact to the group with total cash costs for the closure now expected to be around zero against an original estimate of up to £15mln.
The group warned that it expects to continue to be impacted by both the cost of living crisis affecting consumer spending, as well as by ongoing supply chain issues.
“The whole of the electricals market, is down year on year and in light of this we continue to have a laser focus on profit and cash which will see us driving only profitable sales and channels” the company said.
Nevertheless, AO World forecast full-year adjusted EBITDA at the top end of the £20mln-£30mln previously guided range and said it expects to achieve its medium-term aim of a 5% EBITDA margin in the next financial year.
First half SG&A costs reduced significantly by £17mln and further cost savings are expected of at least £30mln in full year 2024.
In the results statement, AO World chief executive, John Roberts, said: "We've now closed the loss-making and cash consumptive parts of our operations meaning the remaining UK business is cash generative.”