Shares in online white goods and electrical retailer AO World (AO.) took a battering on the release of these half-year numbers as the company warned of “a declining medium domestic appliance (MDA) market” in the UK. As such, and despite a 5.7 per cent improvement in total UK revenues to £335m, cash profits on home turf fell back to £6.9m (from £7.4m in HY2018). While AO is trying to reduce its reliance on the MDA market and, encouragingly, a higher proportion of sales are now derived from new product categories, this has still had a dilutive effect on gross margins.
Across Europe, sales growth was hampered in the second quarter by legislative changes in Germany relating to driver shift patterns, but still rose by 36 per cent to £69.4m, while losses reduced from £13.7m to £12.3m thanks to improved product margins and better management of logistics and overheads.
Analysts at Numis have cut cash profit forecasts for FY2020 from £17m to £10m in light of ongoing pressure in the medium domestic appliance market. But the broker still expects a maiden cash profit of £1.4m for the year ending March 2019, compared with a loss of £3.4m in FY2018.
| AO WORLD (AO.) | ||||
| ORD PRICE: | 116p | MARKET VALUE: | £530m | |
| TOUCH: | 115-116p | 12-MONTH HIGH: | 180p | LOW: 101p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 16p* | NET CASH: | £36.6m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 368 | -9.6 | -1.9 | nil |
| 2018 | 404 | -10.3 | -2.2 | nil |
| % change | +10 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £14.4m, or 3p a share | ||||
