Online electricals retailer AO World has revealed that annual profits almost trebled despite falling sales and said it plans to bounce back with double-digit revenue growth over the year ahead.
The group cheered an “outstanding” performance as it reported a 186% surge in underlying pre-tax profits to £34.3 million for the year to March 31.
The result came in spite of a 9% drop in sales to £1.04 billion after actions to cut costs and strip out unprofitable sales affected revenues.
But this helped boost its bottom line, with the profit out-turn better than it previously expected.
AO World increased its profit guidance at the end of last year to between £28 million and £33 million.
On a statutory basis, pre-tax profits jumped from £7.6 million to £34.3 million for the year to March 31.
AO World added that, despite “ongoing macro-economic challenges”, it remains confident of delivering double-digit sales growth in 2024-25 and seeing underlying pre-profits rise to between £36 million and £41 million.
AO founder and chief executive John Roberts said the group is now a “much simpler, more efficient business”.
“Our focus now is on delivering profitable top line growth with an ambition for double-digit revenue growth in 2024-25,” he said.
But the group said it suffered amid a “particularly challenging year” for the mobile phone market, as consumer demand waned, leading the division to post losses over the year.
It hopes to turn the division around after buying the affordablemobiles.co.uk and buymobiles.net websites, to strengthen its position in the sector.
The firm added that for the year ahead it will look to start reinvesting again to support group-wide sales growth.
“During 2024-25, having embedded the changes from our pivot year, our focus will move back to profitable and cash generative revenue growth through disciplined investment at the right pace and at the right time,” it said.
The company kicked off its turnaround plan with a £40 million fundraising round in the summer of 2022 in a bid to strengthen its balance sheet amid fears of a cash crunch.
AO has since closed its loss-making German operation as part of the shake-up and has launched action to save at least £30 million a year by 2023-24.
The firm has also ditched unprofitable products while introducing delivery charges and cutting cashback incentives to reduce the cost of sales.
As part of its overhaul, it made cuts in its workforce, particularly affecting senior and middle managers, while it also closed a number of offices and moved to remote working across some areas of the group.