June 5, 2018 / 6:44 AM / 10 months ago

REFILE-AO World losses widen on investment in European business

(Corrects dateline)

LONDON, June 5 (Reuters) - British online electricals retailer AO World on Tuesday reported a wider full-year loss mainly reflecting trading losses from its European operations but said it was on track to make that business profitable by 2021.

For the year to March 31 the group, which operates in the UK, Germany and the Netherlands, made a loss before interest, tax, depreciation and amortisation of 3.4 million pounds ($4.5 million) for the year to March 31.

That compared to analysts’ average forecast of a 4 million pounds loss and a loss of 2.1 million pounds in 2016-17.

Revenue rose 13.6 percent to 796.8 million pounds.

Core profit in the UK business fell 7 percent to 22.6 million pounds, impacted mainly by higher marketing costs in the first half and a competitive pricing environment, while losses in Europe reduced to 26.0 million pounds from 26.5 million pounds as AO continued to invest in its European expansion.

“Our European operations continue to build scale and confidence as we remain on track to achieve our FY21 profitable run-rate objective,” said Chief Executive Steve Caunce.

AO said its new financial year had started well in both the UK and Europe, with UK revenue growth returning to double-digit levels against prior year.

“Whilst we remain cautious on outlook given economic and competitive pressures on the UK electricals market we are confident of achieving our stated goals of future growth in the years ahead,” said Caunce.

Shares in AO, up 39 percent so far this year, closed Monday at 152.6 pence, valuing the business at 702 million pounds.

The stock listed at 285 pence in 2014. ($1 = 0.7514 pounds) (Reporting by James Davey, Editing by Paul Sandle)

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