AO Forecasts 13% Rise in Annual Group Revenue

AO World plc ("the Company" or "AO"), a leading European online electrical retailer, announces the following trading update for the twelve months to 31 March 2019 ("FY19").

Summary Group Performance:¹

- Full year performance for FY19 is expected to fall within the range of current market forecasts.²

- Group revenue is expected to be c.£900m, which represents an increase of c.13% year on year (up c.9% excluding Mobile Phones Direct Limited ("MPD")).

- Group Adjusted EBITDA (excluding exceptional costs) is expected to be at the lower end of market expectations

- UK revenue for FY19 is expected to be c.£748m, up 9.8% year on year (up 5.4% excluding MPD)

- Integration of MPD is on track and progressing to plan

- Europe revenue growth is expected to be 32.3% for the year in local currency at c.€174m (32.1% in GBP) 

As part of our Brexit contingency planning, during the last quarter of FY19 we increased our usual core fast moving inventory levels by c.£15m, with a corresponding impact on our cash position.  This will help ensure we can continue to deliver our market-leading proposition to our customers.

Following the re-appointment of John Roberts as CEO in January 2019 we have restructured our management team and, as a result of this together with charges for a loss making contract which we are unable to terminate in Germany, we anticipate incurring exceptional costs in the region of £2.5m in FY19.  These costs are in addition to previously disclosed one-off costs incurred in connection with the acquisition of Mobile Phones Direct Ltd in December 2018 and exceptional share-based payment charges.  Further details will be disclosed in our preliminary statement on 4 June 2019.

John Roberts, Founder and CEO commented:

"Over the last eight weeks we have created a mindset shift from the numbers delivered in FY19; we are setting about realising our opportunities with pace and energy.  I am delighted by the reaction of AO'ers and their passion for our future.  We have already announced that we are testing a genuinely disruptive rental proposition. We have also expanded categories further into garden and DIY ready for the season and we are accelerating AO Mobile to launch later this year in readiness for peak trading. I am delighted to once again have the privilege to lead the business and excited by the scale of value creation that lies ahead of us for the benefit of all stakeholders. I look forward to updating more fully in early June on how we are accelerating our plans to grow while leveraging the infrastructure we have invested in."

All figures reported herein are preliminary and unaudited.

¹ Unless stated, all figures include Mobile Phones Direct Ltd ("MPD") which became part of the AO group on 17 December 2019

²Company compiled revenue consensus of £892.6m, with a range of £876.0m to £904.2m and EBITDA consensus of £0.7m, with a range of £-0.4m to £2.0m.

Source : AO World PLC

For all the very latest news and intelligence on the UK's largest home improvement and garden retailers, sign up for the Insight DIY weekly newsletter.