AO World has announced its audited financial results for the fiscal year ended 31 March 2024, revealing a significant improvement in profitability despite challenges in revenue growth.
AO World shares were up 2.13% at the time of writing.
The company reported an adjusted profit before tax of £34.3 million, marking a substantial increase of £22.3 million compared to the previous year. This growth pushed the profit before tax margin to 3.3%, reflecting the success of AO’s strategic pivot towards profit and cash generation.
AO World has a 15% share of the UK’s Major Domestic Appliances.
Revenue performance met expectations following the company’s decisive actions to streamline operations. AO World eliminated non-core channels and loss-making sales, which initially impacted top-line figures. However, the company reported a return to growth in the fourth quarter, signalling a potential turnaround in revenue trends.
“It’s been a volatile ride for the company and its shareholders over the past few years, after lockdowns saw demand surge for electrical goods and then pull back as it became clear that many customers had simply brought forward purchases,” said Susannah Streeter head of money and markets, Hargreaves Lansdown.
The balance sheet saw notable strengthening, with overall liquidity reaching £116 million at the end of March 2024, up from £89 million in the previous year. Net funds also improved significantly, rising to £34.4 million from £3.6 million in 2023. Additionally, AO World secured an extension of its £80 million Revolving Credit Facility until April 2027, further bolstering its financial position.
“We have made good progress on our profit performance in FY24, which is a testament to the success of our strategic pivot to focusing on profit and cash generation,” said AO’s Founder and Chief Executive, John Roberts.
“We are now a much simpler, more efficient business and are performing better than ever for customers, with excellent and sustainable unit economics.
“Our focus now is on delivering profitable top line growth with an ambition for double digit revenue growth in FY25.”
AO World has set ambitious targets for FY25. The company aims to achieve double-digit revenue growth while projecting adjusted profit before tax in the range of £36 million to £41 million. In the medium term, AO World is targeting an adjusted profit before tax margin of 5%, maintaining double-digit growth with earnings per share outpacing revenue growth.
Investors will be delighted if these targets are met.