AO World experienced a 47.3% increase in UK adjusted pre-tax profits for the financial year ending in March 2015 to reach £16.5m with a margin of 3.5%, according to its annual report.
However, AO saw an adjusted pre-tax loss of £8m for Europe, which is representative of the company’s trading losses in Germany, due to the set-up costs of launching its German site in October. The loss brings the group’s total adjusted pre-tax profit to £8.5m.
Website sales for the UK, from AO.com, were up 32.9% for the period to £381.5m. However, group sales were not as high as anticipated, according to CEO John Roberts. The company claims this was due to a slow-down in sales growth in the last quarter of the financial year because of the publicity extending from AO World’s IPO in February 2014.
“AO is an exceptional business and I am very pleased with the achievements we have made over the year, particularly in Germany and with the successful introduction of the AV [audio-visual] category to AO.com,” said Roberts. “Our long-term plan is on track and, despite missing our financial expectations for the year, we have continued to take market share in the UK MDA market delivering significant growth in UK sales and adjusted EBITDA.”
Times at AO World have been far from stress free and CEO Roberts leapt to the defense of the company after share price fell by a third on the back of the profit warning earlier this year. The profit warning came a year after AO floated on the stock market with an issue price of 285p and a valuation of £1.2bn and although shares in the company initially soared, jumping almost 40pc and giving AO a valuation of £1.7bn, more than 150 times earnings, the rise was short lived. Mr Roberts, who owns more than a quarter of AO, added at the time: “No one feels this more than me.”
Shares in AO then fell sharply amid growing concerns about the profitability of online retailers and last November, analysts at Jefferies, one of the banks that handled the AO flotation, admitted the initial public offering price was “punchy”. The share price has remained below the 200p mark for some months now.
On the announcement of today’s news AO World share prices fell further, hovering at the 170p level.