By James Davey
LONDON (Reuters) -British electricals retailer Currys said it wouldn’t pay a final dividend and would be prudent in its planning, including reducing payments to its pension scheme, as it is concerned about the economic outlook in its markets.
The group also reported a 38% fall in 2022-23 profit, hurt by the weak performance of its Nordics business, sending its shares down 11% in morning trading on Thursday, extending losses over the last year to 28%.
“When it comes to sales we are prudently forecasting another tough year for the market, we’re expecting the market to keep going down in the 12 months ahead,” CEO Alex Baldock told reporters.
Consumers in Europe have been hammered for over a year by high inflation, which has outstripped pay growth for almost all workers.
Baldock said Currys had taken action to maximise operating cashflow through margin improvement, delivering cost savings and reducing capital expenditure.
Further action to mitigate risk included agreeing a previously announced temporary covenant relaxation with lenders, and lowering cash contributions to its pension scheme.
Currys made adjusted pretax profit of 119 million pounds ($151.2 million) in the year to April 29 – in line with its latest guidance but down from the 192 million a year earlier.
Revenue fell 6% to 9.5 billion pounds.
While core profit in the UK and Ireland division rose 45% to 170 million pounds, in the Nordics division it slumped 82% to 26 million “impacted by market challenges”.
“Trading at the start of the year has been consistent with the board’s expectations.
Nevertheless, the economic outlook remains uncertain in our main markets,” Currys said.
The group reported a statutory loss before tax of 450 million pounds for the year, driven by a previously announced non-cash goodwill impairment of 511 million pounds.
In May, Currys said its Nordics business was being investigated by a European competition watchdog, and last month it started a strategic review of its Greek business, which could lead to a sale.
Mike Ashley’s Frasers Group has amassed a 10.4% stake in Currys. Frasers said the holding is “supportive” and it wants to collaborate with Currys.
Baldock said talks had started with Frasers, with “a number of avenues” being explored.
($1 = 0.7868 pounds)
(Reporting by James Davey; editing by Sarah Young and Jason Neely)
