AO World trading update announces revenue increase and continued losses

Online electrical retailer AO World has announced that it expects its full year revenue to be up 14 per cent on the previous year.

In a trading update for the 12 months to 31 March 2018 it said that it expects a revenue of £796m, a 14 per cent increase on the previous year.

That fits within the mid-point of analysts expectations.

It also expects its earnings before interest, taxes, depreciation and amortisation loss to be in the middle of the range of analsysts’ expectations, which could place it between a £1.4m loss and a £9.7m loss.

The previous year it made a loss of £12m.

UK revenue for the year is expected to be £680m, up eight per cent on the previous year, with revenue from AO.com of £606m, a nine per cent rise.

The company said that its growth in the fourth quarter came against the backdrop of a competitive market with limited advertising spend.

Read more: AO World suffers losses as it pushes on with European expansion

When compared to the same period the previous year the company said that it had spent less on advertising which has helped support its gross margin.

It expects growth of 55 per cent in its European operations and said that it is “on trajectory” to achieve its targets by 2021.

Read more: AO World says a “challenging” environment won’t blow it off course

AO launched in Germany in October 2014 and in the Netherlands in February 2016.

Shore Capital described the trading update as “relatively reassuring” but said that “we continue to have concerns around the cash burn of the business”.