AO World slashes profit forecast amid supply chain crisis – business live

Good morning, and welcome to our rolling coverage of the world economy, financial markets, eurozone and trade.

Britain’s supply chain crisis is affecting UK retailers as the crucial Christmas shopping period approaches.

ao world, which sells electrical goods online, has cut its profit forecast for the second time this autumn, blaming global supply chain disruptions, rising costs and problems obtaining some products.

With Black Friday just days away, AO World’s problems highlight the ongoing impact of product shortages, rising prices and the problems of shipping goods around the world and Britain’s congested ports,

the company was a lockdown winner As people shopped from home in the pandemic, AO’s sales of items such as laptops, mobile phones, washing machines and printers boosted.

But today, it tells shareholders it still faces ‘meaningful’ supply chain challenges.

At the start of our fiscal year in April, we planned for continued revenue growth and built our cost base accordingly. However, since then, growth in the UK has been affected by a nationwide shortage of delivery drivers and ongoing disruption to the global supply chain, and increased competition in the German online market.

As we now look into the second half, we continue to see meaningful supply chain challenges with poor availability in certain categories, particularly in our new products where we have less scale, experience and leverage. In addition, shipping costs, material input prices and consumer price inflation remain challenging uncertainties.

As a result of these factors, the all-important current peak trading period is significantly softer than what was expected just eight weeks ago.

AO World now expects to make an adjusted profit of between £10m and £20m this year, down from the £35m-£50m forecast eight weeks ago. The group’s revenue may decline by up to 5% this year.

This is the second warning from AO World in less than two months. In early October, the firm slashed its forecasts. The company was affected due to supply chain problems.

AO World also reports that revenue in the first half of the fiscal year as of September 30 was up 6% from the previous year – and 67% above pre-pandemic levels.

But the firm has made a pre-tax loss of £10m in H1, down from £18m profit a year ago, with adjusted profit shrinking to £5m from £28m a year ago.

still coming today

When the latest ‘Flash PMI’ surveys of purchasing managers are released, we find out just how much the supply chain crisis is hurting other companies.

They are likely to show that eurozone companies slowed down as Covid-19 infections increased this autumn.

Michael Hewson NS CMC Markets telling:

The risk of a fall back into an economic contraction is increasing with each passing day, and this in itself is feeding a weaker euro, and while today’s flash PMIs for Germany and France still point to fairly good levels of economic activity They have been going in the wrong direction for many months now.

Economic activity in both France and German manufacturing is expected to slow to 53.1 and 56.9 respectively, while in services we can expect to see a similar moderation to 55.5 for France and 51.5 in Germany.

UK PMI likely to strengthen, however, hewson adds up:

The UK, on ​​the other hand, is already opening up, and seeing infections remain stable at high levels through the summer, may have a season-wise, booster program as well as a role in building a more resilient wall of immunity. Have played the role of blind. gets cold. That’s not to say that the strategy still can’t be pear-shaped, but in terms of economic activity we haven’t seen the type of decline we’ve seen in Europe.

Today’s November Flash PMI numbers are expected to see slow manufacturing from 57.8 to 57.3, while services, which saw a decent jump from 55.4 to 59.1 in October, are set to fall back to 58.5.

Elsewhere, UK Energy Suppliers bulb energy An untested bailout process is being put in place that will rely on public funding to manage the biggest collapse ever in the energy crisis.

The company will be handed over to a “special administrator” who will have access to government funding to keep it running, supplying gas and electricity to its 1.7 million domestic customers.

work schedule

• 9am GMT: Eurozone Flash PMI Manufacturing and Services Survey for November
• 9.30am GMT: UK flashes PMI survey of manufacturing and services for November
• 11am GMT: BoE policy maker Jonathan Haskell gives a speech at Adam Smith Business School on “high inflation now and then”
• 2.45 a.m. GMT: US Flash PMI Manufacturing and Services Survey for November
• 3 pm: The Economic Affairs Committee of the House of Lords takes evidence from Bank of England Governor Andrew Bailey on central bank digital currencies (CBDCs).