Telford plant hailed as AO warns over tough trading

White goods retailer AO World hailed a year of "great progress" in the business, despite seeing widening losses and an increasingly difficult UK market.

The company, which during the year opened a new state-of-the-art recycling operation at Halesfield in Telford which will employ 200 people, saw pre-tax losses grow from £6.7 million to £7 million in the year to March 31.

Total revenue for the period increased by 17 per cent to £701.2 million with both the UK and Europe businesses growing sales.

But AO warned that its growth would slow "significantly" in the first quarter, as consumer confidence in the UK tumbles.

Steve Caunce, chief executive of AO World, said: "Trading this year has been mixed, particularly for our UK business.

"In the second half of the year, trading in the UK became more challenging as we began to feel the impacts of dampening consumer confidence following the UK's vote to leave the EU, subsequent price inflation and a slow-down in the UK housing market."

The group said with no let up in the difficult UK conditions and tough comparatives from a year earlier, "we expect our UK first quarter growth rate to slow significantly year on year".

AO World saw an improvement in group-wide operating losses on an underlying basis, narrowing by 46.2 per cent to £2.1 million, thanks to a better first half performance from the UK.

The group has since been grappling with a jump in import costs following sterling's slump, while rising inflation has put the squeeze on consumer spending.

Shares in the company have plunged 62 per cent since its listing in 2014, resulting in it being demoted from the second tier to the small cap index in the latest FTSE reshuffle, which takes effect on June 19. Shares fell another six points in early trading as investors digested the full-year results.

AO World said the official launch of its 75,000 sq ft recycling facility at a 10-acre site in Halesfield in Telford would take place later in the year, and said the site would allow waste electricals to be properly disposed of an recycled, adding that it "can make a very exciting contribution to the business in the future".

Revenue from that operation will grow in the future, although it is expected to represent a small part of group revenue. It was part of a £16.9 million capital expenditure programme the business went through last year.

Once fully operational, the site will employ 200 people.