Washing machines giant AO hails Telford plant

The online white goods seller warned that profits would come in towards the lower end of expectations as it fell to a loss amid higher investments and tough UK trading conditions.

The company said it booked a pre-tax loss of £9.6 million for the six months to September 30, having reported a profit of £2.3 million in the same period a year earlier.

It said half-year losses were "largely a reflection of concentration and increase" in its UK marketing spend in the first quarter as well as investments to help scale up and expand its European business.

However, the company praised progress at its new recycling plant in Telford, which opened about a year ago and employs 200 people.

The company said the facility, on a 10-acre site at Halesfield, was now fully operational and is dismantling all AO's waste electrical goods and contracting out work for other organisations.

In its half-year results the company said: "This is another great example of how we have applied the AO Way to an underinvested section of the market and it should make an exciting contribution to the business in the future."

But the company also reiterated that it faced "particularly challenging" UK trading conditions at the start of the financial year, having seen volumes drop amid "a fall in consumer confidence associated with the Brexit process".

The change in UK stamp duty also hit the business, resulting in fewer customers shopping for new home appliances.

AO World cautioned that while it expects to deliver full-year underlying operating profit within its target range, those figures would be "towards the lower end".

Chief executive Steve Caunce said: "We are broadly on track with our plans for the year as a whole - with the positive impact of improving sales growth through the first half of the year combined with the first half biased phasing of our marketing spend - in spite of the challenging UK market conditions."

However the statement added: "All economic indicators point to no respite in the challenging market conditions in the short term and there are widespread reports of a poor outlook in housing transactions."

Shares fell two per cent after the interim results.

Revenue for the half-year rose to £368 million, up from £324.7 million a year earlier, with its UK operations still notching up a 7.4 per cent rise in sales to £316.8 million.