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Dixons Carphone profits down £259m

Dixons Carphone has posted its preliminary results for the 12 months to 27th April 2019, reveal a statutory loss before tax of £259 million, compared to its pre-tax profit of £289m last year.

“The past year has seen us keep our promises to investors, delivering around £300 million of headline profit, resilient free cash flow, and continued growth in sales and market share in UK & Ireland electricals and International. And we’ve taken the first big strides in our transformation,” commented Alex Baldock, Group Chief Executive.

“But we know we have it in us to be a much more valuable business. That will take time. In December, we set out a clear strategy to help everyone enjoy amazing technology, and early progress is promising.

“In UK & Ireland electricals, we expect growing sales and headline profits this year and beyond. We’ve made significant gains in Credit and Online – both big profitable growth opportunities for us. Early steps towards an easier customer experience have seen satisfaction scores start to rise. And we’ve laid important foundations for Services to make our customer relationships stickier and more valuable.”

Baldock said the same focus on Credit, Online and Services will “ensure our strong International business continues its trajectory of growing sales and market share, while further improving profitability”.

He pointed out that in UK mobile, the market is changing “in the way we described in December, but doing so faster”. In an attempt to combat this, Dixons Carphone plans to move faster to respond.

“We’ve renegotiated all our legacy network contracts, we’re developing our new customer offer, and are accelerating the integration of Mobile and Electricals into one business. This means taking more pain in the coming year, when Mobile will make a significant loss,” said Baldock. “But accelerating our transformation provides certainty that this year is the trough, as during next year the legacy contractual constraints on our Mobile business lift, and the integration cost benefits build. We expect Mobile will at least break even within two years, and beyond that, equipped with a stronger and unconstrained offer, we will of course aim to do better. In any case, cash generation from Mobile will be strong.

“Overall, with investment in our transformation underpinning UK & Ireland electricals and International growth in sales and headline profits, and accelerating the changes in Mobile, we’re confident to bring forward our long-term ambitions. We still commit to over £1 billion of Group free cash flow over the five year plan, but also to accelerate our £200 million cost reduction promise by two years, and our promise of at least 3.5% Group EBIT margins by a year.

“I want to thank my tens of thousands of colleagues at Dixons Carphone for their unrelenting hard work. This business matters, not just to us, but to the millions of people whose lives we can improve through the power of amazing technology. So it’s with a sense of responsibility that we commit to transforming Dixons Carphone into a world class business for colleagues, customers and shareholders. We believe we will.”

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