Better than expected results from telecoms and electrical goods retailer Currys (LON: CURY) perked up the share price, but management is cautious about the trading outlook and a profit fall is anticipated.
Underlying pre-tax profit of £155m was expected, but the outcome was £186m, although this was partly down to one-off factors, including a revaluation of the telecoms network debtor. There were cost savings of £69m in the UK and a switch from online to store sales helped margins. The past problems obtaining products are easing.
Revenues dipped from £10.3bn to £10.1bn, although they were flat on a constant currency. There was a decline in the UK revenues that was offset by growth in Greece. On a constant currency basis there was growth in the Nordics. Group like-for-like revenues were 3% lower.
The final dividend is 2.15p a share, taking the total to 3.15p a share. Net cash was £44m at the end of April 2022. The pension liability was reduced from £482m to £257m.
Guidance
There remains uncertainty about consumer spending. The 2022-23 pre-tax profit is likely to be in the range of £130m-£150m, partly due to lower margins. The business will continue to be cash generative and there are plans for capital investment of £140m-£160m.
Currys is targeting an underlying operating margin of 3% by 2023-24. Last year, the operating margin improved from 2.5% to 2.7%.
