AO World, a UK-based online consumer electricity retailer, has raised its full-year profit expectations after returning to profit in the first half. Despite sales declines in a challenging discretionary market, reduced costs and improved margins have offset this decline. The UK is facing several economic challenges such as falling inflation, high borrowing costs, slowing property market and pressure to spend heavily.
In the six months to September 30, AO reported pre-tax profits of £13m compared to a loss of £12m in the same period last year. This was despite a 12% fall in revenue to £482m. For the full year 2023/24, the company forecasts pre-tax profits of £28m to £33m, an improvement on previous guidance of around £28m. Additionally, AO expects full-year revenue to decline by about 10%.
AO has expressed its intention to continue prudently investing in the business and take advantage of significant market opportunities. In June, a strategic partnership was formed between AO and Mike Ashley’s Frasers sportswear and fashion group, making Frasers the largest shareholder with a 22.1% ownership stake. AO shares are up 60% year-to-date.
The company remains optimistic about its future prospects and is confident that it will continue to invest in the business and take advantage of significant market opportunities as it moves forward. Overall, AO World’s ability to manage expenses effectively has allowed it to remain profitable despite challenging conditions in the UK consumer market.