After battling to get its UK business on track, AO World (AO.) has reported that UK sales were up by a fifth at the half-year mark, while adjusted cash profits from the division reached £7.8m. However, the online electrical retailer's European operations continue to fall short of expectations, evidenced by an adjusted cash loss of €15.9m (£13.6m), so management has opted to close its business in the Netherlands following a review of its operations on the continent.
The group’s Dutch business will cost £3m to shut down, and will cease trading by the end of the year. Chief executive John Roberts said management did not have the “bandwidth to make the necessary turnaround in both the German and Netherlands territories at the same time”. It will instead focus all of its energies on turning the German business around. It believes the division will become profitable on revenues of €250m.
In the UK, it launched an own-brand mobile phone proposition in August – ahead of schedule – building on its acquisition of Mobilephonesdirect.co.uk, and in October it announced a new commercial partnership with Vodafone (VOD) to sell more of the provider’s plans through its platform.
Broker Numis is forecasting adjusted pre-tax profits of £2m for the March 2020 year-end, up from a loss of £8.5m in FY2019.
| AO WORLD (AO.) | ||||
| ORD PRICE: | 65p | MARKET VALUE: | £307m | |
| TOUCH: | 64-65p | 12-MONTH HIGH: | 137p | LOW: 57p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 16p* | NET DEBT**: | 16% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 404 | -10.9 | -2.31 | nil |
| 2019 | 470 | -5.9 | -1.01 | nil |
| % change | +16 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £44m, or 9p a share **Excludes IFRS 16 lease liabilities of £71m | ||||
