has narrowed its full-year losses despite the “challenging trading environment” in the UK and continued losses in Europe.

The online electricals business posted a £2.1m loss in adjusted EBITDA for the year to March 31, an improvement on the £3.9m loss it suffered in the previous year.

AO also narrowed its adjusted operating loss to £7.7m from £8.7m in 2016, as group revenues surged 17% to £701.2m. 

However, the business said operating losses widened from £10.6m last year to £12m in 2017.

Despite posting group-wide losses, AO hailed the profitability of its core UK business.

Adjusted EBITDA in its domestic market rocketed 41.7% to £24.4m, as total UK revenues climbed 12.7% to £629.7m.

Revenues in Europe also increased, growing 52.3% in constant currencies to £71.5m, but adjusted EBITDA losses on the Continent increased by a quarter to £26.5m.

AO said that reflected losses in the Netherlands during its first full year of trading in the country and further trading losses in Germany as it continues to build scale.

The etailer hailed an “encouraging” response to its launches into the computing category in the UK and the audio visual market in Germany during the year.

It also lauded the opening of its regional distribution centre and head office in Bergheim and recycling facility in Telford.

AO warned that growth in the first quarter of its current financial year would “slow significantly” as a result of the challenging trading environment in the UK and strong comparables from the prior year, when changes to stamp duty at the end of March 2016 boosted sales.

The electricals specialist added that it remains “on track” with its plans for Europe in the current year and is “confident in the long-term prospects” of its international businesses. boss Steve Caunce, who succeeded founder John Roberts as chief executive in February, hailed “another year of great progress” for the business.

He added: “We remain as committed as ever to doing business The AO Way and continuing to deliver outstanding results for our customers, our people, our supplier partners and our investors.”