Currys Shares Surge After Strong H1 Results

Shares of Currys (LON:CURY) soared over 11% on Thursday following impressive results for the first half of fiscal 2025, demonstrating strong profitability growth despite a challenging consumer environment.

Market Share Gains

The company gained market share in both the UK & Ireland and the Nordics, with disciplined cost control and gross margin improvements driving investor optimism.

Financial Performance

Currys reported an adjusted pre-tax profit of £9 million for H1, a turnaround from the anticipated losses. RBC Capital Markets had expected a £9 million loss, while consensus estimates projected a £2 million loss. Adjusted EBIT increased by 52% year-on-year to £41 million, highlighting the company’s operational resilience.

Group sales for the period reached £3.92 billion, surpassing expectations. UK and Ireland sales rose to £2.34 billion, with adjusted EBIT at £23 million, outperforming analyst forecasts. The Nordics region delivered adjusted EBIT of £18 million, although sales of £1.58 billion were slightly below consensus estimates.

Cash Flow and Balance Sheet

Free cash flow soared to £50 million from £4 million in the previous year, and Currys’ net cash position reached £107 million, marking its strongest balance sheet since the 2014 merger. This financial stability has led management to reaffirm plans to resume shareholder cash returns in 2024.

Analyst Upgrades

Berenberg analysts upgraded their FY 2025 adjusted PBT forecast by 4% to £145 million, citing a lower interest charge due to an improved balance sheet and reduced lease liabilities. This adjustment offsets anticipated £32 million incremental costs from recent UK budget changes, including employer National Insurance contributions and minimum wage increases.

While FY 2026 and 2027 adjusted PBT forecasts remain unchanged, Currys’ guidance on cost management enhances confidence in sustaining profit growth. The company expects normalized capital expenditure to stay below £100 million annually and aims to reduce exceptional cash costs to below £10 million by FY 2027.

Debt and Pension Deficit

Currys has reduced its indebtedness by over £700 million from FY 2019 to FY 2024, with improvements expected to continue. Berenberg predicts the elimination of the company’s pension deficit by FY 2027, ceasing contributions and potentially boosting free cash flow to equity to about £100 million in FY 2027 and over £150 million annually thereafter.

iD Mobile Network

The iD Mobile network now boasts over 2 million subscribers, reflecting a 32% year-on-year increase, alongside a recurring, higher-margin services revenue of £700 million, showcasing strong cash generation potential.