ii view: AO World beefs up profit forecasts

First-half results to 30 September

• Revenue up 14% to £586 million
• Adjusted pre-tax profit up 5% to £18 million
• Group net cash held up 70% to £65 million

Guidance:

• Now expects full-year pre-tax profit towards the upper end of its previous £45-50 million estimate

Chief Executive John Roberts said:

"These numbers speak for themselves, and it's been another positive six months of operational and financial progress.

"Our strategy is working and we're as confident as ever about AO's upwards trajectory. As always, I'd like to thank every single one of our awesome AOers for their continued focus and dedication to giving our customers the best possible value."

• Invest with ii: Top UK Shares | Share Tips & Ideas | Open a Trading Account

ii round-up:

Online electrical retailer AO World (LSE:AO.) today upped its expected full-year profit prediction as trading over the first half proved stronger than anticipated. 

Sales in the first half to late September rose 14% to £586 million, driving adjusted pre-tax profit up 5% to £18 million. The Bolton headquartered company now forecasts annual pre-tax profit around the top end of its previous £45-50 million estimate. 

Shares in the FTSE 250 company rose 5% in UK trading having come into these latest results down by a similar amount so far in 2025. The FTSE 250 index is up 4% year-to-date. Rival Currys (LSE:CURY) have gained almost a third during that time. 

AO sells items ranging from kitchen white goods to TVs, laptops, and mobile phones. The group's recently launched ‘Switch24’ proposition enables AO’s five-star members to buy the latest iPhone 17 from as little as £17 per month as well as then switching to the latest handset every two years.

According to data from research firm Gfk, market share gains helped consumer, or B2C revenues rise 12% during the period. 

The gain in profits achieved during the period came despite a £4 million headwind from minimum wage and national insurance cost increases.

Group net cash held of £65 million rose from £38 million a year ago. Only £1 million of a £10 million share buyback programme to late March 2026 has so far been used. 

Full-year results to 31 March are likely to be announced mid to late June. 

ii view:

Started 25 years ago, AO World continues to be run by founder John Roberts. Product sales accounted for most revenues over its last financial year at 83%. That was followed by mobile phones at 8%, then 4% for re-commerce sales which involves the buying and selling of refurbished products as well as media such as CDs. Finally, third-party logistics at 3%, and product recycling at 2%. Other group brands include musicMagpie and Elekdirect. 

For investors, the tough economic backdrop and expected UK tax rises at Autumn Budget cannot be overlooked. A UK online-only offering compares to both store outlets and overseas exposure for rival Currys. An arguable lack of mobile phone innovation has left many consumers happy to keep existing handsets for longer, while AO currently pays no dividends unlike Argos owner Sainsbury's.   

• Autumn Budget countdown: four rumoured reforms
• 10 hottest ISA shares, funds and trusts: week ended 21 November 2025
• Stockwatch: two oversold shares or a warning sign?

On the upside, a previous management focus on profits now likely aids an upgrade in full-year expectations. A diversity of businesses now includes re-commerce brand musicMagpie and an electrical goods recycling division. Net cash held offers a robust balance sheet, while new product categories now include drones, fitness, and health and beauty. 

On balance, and while some caution still looks sensible, a consensus analyst fair value estimate above 130p per share is likely to see fans remain optimistic about long-term prospects.  

Positives: 

• Without the costs of a store portfolio
• Estimated total addressable market of over £28 billion

Negatives:

• Not yet paying a dividend
• Uncertain economic outlook

The average rating of stock market analysts:

Buy