AO has adjusted its annual forecast upwards following strong sales and profit growth in the first half of the year.
- The company now expects adjusted profit before tax to be between £39 million and £44 million.
- Total revenues are projected to hit approximately £1.13 billion.
- Operational highlights include the expansion of the Five Star membership and the acquisition of musicMagpie.
- Changes in the UK Budget are anticipated to increase AO’s costs by an estimated £12 million annually.
AO has revised its full-year forecast upwards, reflecting substantial profit and sales gains in the first half of 2024. Adjusted profits before tax are now anticipated to range between £39 million and £44 million, driven by a 30% increase in this metric to £17 million for the six months up to 30 September 2024. Revenues during this period grew by 6%, reaching £512 million, with the business-to-consumer (B2C) sector seeing a 13% rise to £382 million.
The increase in profits outpaced revenue growth, aligning with AO’s strategic targets for the period. Operating profits saw an 11% boost, highlighting effective cost management and operational efficiency. The company achieved several key objectives, such as expanding its Five Star membership programme and launching a third-party warehousing solution for smaller products.
AO’s strategic acquisition of musicMagpie marked a significant milestone during this period, enhancing its market position. Additionally, the company anticipates the recent UK Budget will lead to £4 million in direct and £8 million in indirect costs annually.
Chief Executive John Roberts expressed satisfaction with the company’s performance, citing the “Morecambe and Wise summer” as a factor: unexpected sales patterns driven by unseasonal weather led to fewer refrigeration units and air conditioning sales, while tumble dryer sales increased. He commended his team for their adaptability and emphasised the company’s progress in diversifying product offerings beyond its core Major Domestic Appliances (MDA) category.
Roberts also noted, “Our laser focus on costs and efficiency remains,” underscoring the successful strategy of accelerating profit growth beyond sales increases. This focus ensures the continued achievement of margins and targets, as AO works towards a profit before tax (PBT) margin of over 5%.
AO’s strategic adaptability and operational focus have placed it in a promising position for continued growth.
