Ao.com half-year profits rise as margin gains bear fruit

The online electricals retailer swung back into the black with an adjusted EBITDA of £1.5m across the group, following a £4.5m loss during the same period last year.

Group revenues advanced 22.9% to £324.7m during the six months ending September 30.

In the UK, adjusted EBITDA, which strips out one-off costs such as set-up fees associated with overseas expansion, more than doubled from £5.1m last year to £13.1m.

The etailer’s UK sales jumped 18.7% to £295.1m during the period. It said the growth was “mainly attributable” to a spike in sales of its own-label ranges.

In Europe, where Ao.com has operations in the Netherlands and Germany, the business suffered an adjusted EBITDA loss of £11.6m as it continued to invest in expanding in the two countries.

Ao.com said those investments drove a group operating loss of £2.8m during the first half, offsetting the operating profit of £9.4m it registered in the UK.

The business said gross margin increased from 19.3% to 22.5% in the UK as its increased buying power allowed it to improve supplier product margin.

However, Ao.com warned that since the end of its financial first half, those margin gains have been put under pressure from supplier price increases following Brexit and currency fluctuations.

Despite the words of caution, Ao boss John Roberts hailed the results as “a great start” to the year.

He added: “We have made progress in our mission to become the best electrical retailer in Europe, cementing our operations in Europe with the opening of our distribution centre in Germany and launching new categories for customers in both the UK and Europe.

“Bringing our AO customers computing in the UK and A/V in Germany has been exciting and these are the natural next steps for us to take in the electricals market.”