AO World shares soar as it closes Netherlands unit

Shares of Bolton-based online electrical retailer AO World rose about 13% on Tuesday after it said its revenue rose 16.3% to £470.1 million in the six months to September 30 and that it will close its Netherlands operation to focus on its business in Germany.

The firm said core losses — pre-IFRS 16 group adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) — increased to £6.2 million from £5.4 million in the same period last year, with profit growth in the UK more than offset by the group’s European performance. 

AO World founder John Roberts returned to the firm as CEO in February.

Analysts at Peel Hunt wrote: “A disappointing set of results, but actions have been put in place to take the company forward …

“Operationally, the company has decided to close its Netherlands operation in H2, which will enable AO to accelerate profitability in Germany, where it sees three core drivers of growth.

“The company expects to be cash generative at a group level as it enters the new financial year (year end March).

“Today, we put both estimates and the company under review.”

AO World CEO John Roberts said: “These results were achieved during a period of significant change for the business where we were focused on laying the foundation for disciplined, long-term growth. 

“There are encouraging green shoots of profitable growth across our UK business, including within our core MDA offer and we will continue to invest to drive this further.  

“Our relentless focus to accelerate profitability in Europe continues and as part of this, we have today announced the closure of our Netherlands operation.

“This will enable us to concentrate on the transformation of our German business, where we have increased confidence in, and visibility of, the three core drivers of the business model that will put us on the path to profitability.

“We have also kept a clear focus on cash generation, and we expect to be cash generative at a group level as we enter the new financial year.

“Our ecosystem of complementary products and services continues to strengthen, providing us with the belief that these can be leveraged to underpin future growth and profitability in the UK. 

“Overall, I am pleased with the operational progress that we have made in this period and would like to thank AOers across the business for their continued commitment.”