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AO World PLC on Tuesday increased its profit guidance for financial 2023, citing cost cuts amid falling revenue.
The Bolton, England-based electrical retailer was ‘cautiously optimistic’ in an unscheduled trading update, hiking its guidance for adjusted earnings before interest, tax, depreciation and amortisation the year ending March 30 to £30 million to £40 million, from £20 million to £30 million previously.
For the twelve months that ended March 31, 2022, AO World reported adjusted Ebitda of £8.5 million, down 87% from £64.4 million in 2021.
Last year, AO World refocussed it strategy from sales growth to profitability and cash retention, setting a target for a cash profit margin of 5%.
Though UK revenue remains in line with forecasts, down 17% from a year prior, ‘actions taken by the business’ have gained traction quicker than expected.
Looking ahead, AO World is ‘mindful of the continuing macroeconomic uncertainty and tough consumer environment’, but encouraged by profitability running ahead of expectations.
AO World shares were trading 0.1% higher at 69.70 pence each in London late Tuesday morning. The stock had initially jumped to 81.90p on the news before giving back that gain throughout the morning. It is down 32% over the past 12 months.
By Holly Beveridge; Alliance News reporter
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