AO focuses on cash generation as sales fall

AO reported that its core UK business had been “resilient” amid a tough trading environment, while its German division suffered in the year to March 31.

AO said group revenues fell 6% year on year, though they were up 52% on a two-year basis. The core UK market’s sales declined 5% and rose 52% respectively, while Germany was down 12% and up 54%.

AO founder John Roberts also disclosed that he will “dispose of a small proportion of his equity holding on an annual basis”.

AO, which is reviewing the future of the German division, was cautious about prospects. It said: “In view of the volatile market conditions, inflationary cost pressures and logistical challenges in the supply chain, together with the escalating cost of living for consumers, we remain cautious about our revenue and profit outlook in the near term.

“In the coming year, we will focus on cash generation to strengthen the balance sheet whilst optimising our cost base to align with the expected lower levels of revenues.”

However, it said despite market challenges, it was confident in its long-term prospects “given the inherent resilience of our business model, the quality of our customer proposition and the ongoing structural shift to online”. 

AO said group adjusted EBITDA is expected to be £8m, reflecting the impact of lower sales volumes, higher UK logistics costs and driver shortages across the industry.

• Don’t miss the best of the week – sign up to receive the Editor’s Choice every Friday