Energised AO World will continue to achieve double-digit growth, says CEO
Online electrical retailer, Bolton-based AO World, has seen unprecedented growth over the year and says it will continue to see double-digit growth, despite tough comparatives.
In a trading update ahead of releasing annual results on June 16, it said it delivered a strong performance across all aspects of the business, stepping up to, and capitalising on, the challenges and opportunities presented by the COVID pandemic.
This included significant increases in revenue, a step change in profitability at both group and divisional levels, strong cash generation, improved financial resources, and substantial progress in operational capability.
Group revenues increased by 62% to £1.66bn, with momentum continuing in the fourth quarter. Its UK website, AO.com, increased year-on-year revenue by 88% in the fourth quarter, and AO.de, the German website, increased full year revenue by 77%. The German business achieved run rate profitability in quarter three and is expected to generate profits in the current financial year.
More than two million new customers were added in the financial year, while AO’s customer satisfaction rating, as measured by Net Promoter Score, continued to be ranked amongst those of world-leading consumer companies at more than 803.
As a result of these achievements, group adjusted EBITDA, despite COVID-related costs, is expected to be in the range £63m-£72m, compared with £19.6m in 2020, in line with market consensus. Over the period, government support was either repaid or not claimed and had no impact on profitability.
The group also generated £60m of cash over the year, with cash of £66.5m at the year end, compared with £6.9m the previous year.
Net cash at year end stood at £57m, up from net debt of £23.4m in 2020, with the re-negotiated rolling credit facility of £80m now maturing in April 2023. This gives total liquidity headroom of £142.6m at the period end.
AO chief executive and founder, John Roberts, said: “I am delighted to report a year of outstanding financial, operational and strategic progress.
“The last 12 months have been like no other and we have been very proud to rise to the challenges for our customers – keeping their lives powering on with essential electrical and technology products.
“Serving customers in The AO Way and treating every customer like our own gran, irrespective of cost, has enabled us to impress millions of customers with a better way to shop electricals.
“We were brave and bold in our capacity and infrastructure investments early in the year and now look forward to building on that scale advantage.”
He added: “I believe that these market dynamics will stick and, whilst there is inevitable uncertainty, the direction of travel is firmly with AO and the business model we have spent more than 20 years building.
“I expect that we will continue to be a double-digit growth business in the year ahead, even now as we lap the tough comparatives from last year with physical stores open. I look forward to providing more detail at our full year results in June.”