Currys suffers annual loss and axes dividend

Currys (LSE: CURY) has announced an annual loss and a decision to forgo its final dividend.

Currys disclosed in its financial report that its profit was overshadowed by weak performances in the Nordic region, leading to a decline in revenue.

Currys’ shares plummeted by 13% to 46.70 pence during Thursday morning trading in London due to the announcement of their annual loss.

During the year that ended on April 29, Currys experienced a shift from a pretax profit of £126 million to a pretax loss of £450 million.

The company attributed the loss to a non-cash impairment of £511 million on the UK and Ireland goodwill, stemming from the Dixons Carphone merger in 2014.

According to Currys, their adjusted pretax profit of £119 million fell within the upper range of their financial year’s guidance, but it marked a 38% decline compared to the restated figure of £192 million from the previous year.

Revenue also experienced a decline of 6.2%, dropping from £10.14 billion to £9.51 billion.

Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) for Currys experienced a reduction of 12%, from £594 million to £524 million. This decline was largely attributable to a significant drop of 41% in Nordic adjusted EBITDA, which fell from £265 million to £156 million compared to the previous year.

Chief Executive Alex Baldock expressed, “In the Nordics, the markets we operate across have been experiencing a painful period with softer demand coupled with cost of goods sold inflation, exacerbated by excess stock and some competitions pursuing strategies focused on growth at the expense of profit or cash flow.”

As a result of these financial challenges, Currys decided not to declare a final dividend for the 2023 financial year, a departure from the previous year’s 2.15p per share.

In light of the uncertain economic outlook, Currys stated, “Cognisant of the uncertain economic outlook, the board has decided not to declare a final dividend for the 2023 financial year. Our capital allocation priorities remain unchanged.”

The company reported that its trading at the start of the year has been in line with board expectations. However, it acknowledged the lingering uncertainty surrounding the economic outlook.

Currys has shared its future plans, which include a capital expenditure budget of £80 million for the financial year 2024. This represents a 25% decrease compared to the previous year, as the company aims to tighten its controls and reduce transformational spending. Furthermore, Currys expects to incur net exceptional cash costs of £50 million, which can be attributed to increased property costs and restructuring.

Currys aims to achieve a minimum adjusted EBIT margin of 3.0% in the long term. Exceptional cash expenses are expected to decrease from 2025, leading to increased profitability in the long term.