Electricals retailer with huge Telford recycling plant says 'no plans to cut staff' - despite offshoring plan
Online electricals retailer AO World says it plans to recruit more staff overseas, after announcing record profits for the last financial year.
The group reported a better-than-expected 32% rise in underlying pre-tax profits to £45 million for the year to March 31, which it said was down to the success of its membership scheme and surging sales.
The news came after the company revealed that it was looking to offshore some of its operations to offset a hike of around £8 million in costs a year from April’s higher national insurance contributions and minimum wage rise.
AO World employs around 3,000 people worldwide, including at an enormous appliance recycling plant in Telford, which the company says is one of the biggest of its kind in Europe.
Central to factory operations is a huge fridge crushing machine known as Bertha, which weighs 80 tonnes and can process "up to 100 fridges per hour."
While no mention was made of the Telford operation, the company's chief executive John Roberts said that it would "increasingly look to mitigate" its increased staffing costs through "automation, outsourcing and offshoring".
Mr Roberts, also the firm's founder, said the group had no plans to cut jobs and was recruiting staff, but said some of these would be likely to be outside of the UK.
"We don’t have any plans to get rid of people or have any plans for redundancies," he said, adding: "We’re on a recruitment drive across the business."
“While the costs with legs walking into the business keep rising, then the motivation to invest more in efforts to try to offset that are increased."
Including its recently acquired Music Magpie business, underlying profits at the firm rose 27% to £44 million.
The group saw like-for-like sales lift 7% to £1.11 billion and said it was “confident” of another sales rise in the new financial year.
Sales were boosted by the deal to buy Music Magpie last October for around £10 million, with AO World saying this added £30 million to revenues.
It also hailed its membership scheme for helping drive sales, as well as moves to broaden its product range to about 9,000 items.
"Despite the wider macroeconomic challenges, particularly employment cost increases, our objectives remain unchanged and we are confident in our ability to continue to grow revenue, alongside group adjusted pre-tax profit of £40 million to £50 million," said a spokesperson for AO World.
In November last year, the company's recycling plant in Telford was the subject of a BBC Documentary.
