Published on June 4th, 2019 | by The GC Team0
AO narrows full-year losses despite tough UK trading environment
Online retailer AO World today announced adjusted EBITDA losses of £0.4m for the year ended 31st March 2019, down from a loss of £3.4m in the previous year.
UK adjusted EBITDA improved by 20.9% to £27.4m, up 14.3% on a like-for-like basis, excluding EBITDA from Mobile Phones Direct, which became part of the Group last year.
Adjusted EBITDA losses in Europe increased from €29.6m in 2018 to €31.3m, reflecting less progress than the business expected on product margins and cost pressures from reconfiguring driver scheduling arrangements in Germany.
The Group posted an operating loss of £15.2m, against a loss of £16.2m in 2018, reflecting an increase in UK operating profit of 28.4% to £14.9m, which was offset by trading losses of £30.1m in Europe, up from £27.8m last year.
The company reported continued revenue growth in both the UK and Europe with total revenue for the period increasing by 13.3% to £902.5m against a backdrop of ongoing weak consumer confidence in a continuingly competitive market, particularly in the UK.
Total UK revenue rose 10.1% to £749.3m, up 5.7% on a like-for-like basis excluding revenues from the newly acquired mobile phones business.
Revenue in Europe increased by 32.2% on a constant currency basis to €173.3m.
John Roberts, AO Founder and Chief Executive Officer, said: “We’ve delivered double digit revenue growth in the UK and achieved over 30% in Europe and adjusted EBITDA in the UK has improved by over 20%.
“The UK result was achieved against an ongoing tough trading environment and includes three months’ contribution from Mobile Phones Direct which we acquired in December 2018 and its integration continues to go to plan.
“Adjusted EBITDA losses in Europe have increased slightly against the prior year with progress hampered somewhat by driver challenges in Germany and a lack of real improvement in product margin and customer acquisition costs. We are working to address these issues.
“The AO model is an eco‐system of complementary competencies across retail, mobile, recycling and logistics through to financial services and B2B trade. We have huge structural advantages when these capabilities operate in harmony. So, we have enhanced structure with informality and a renewed mindset and are now releasing the immense unrealised value we’ve created. We’ve started to see this in the last few months and it will be an important driver for the year ahead.”