Npower posted a first half operating loss amid “fierce” competition in the UK energy retail market. The company, echoing Eon’s sentiment, said risk of political intervention looms large over its business and may yet affect its forecasts.
“The situation in the UK retail business remains very tense due to the fierce competition and political pressure,” said parent company Innogy in a trading statement.
“Measures to reduce costs within the scope of the restructuring programme will help to partially offset negative market effects. However, the Retail United Kingdom segment is not expected to generate positive adjusted EBIT in 2017. Overall, in the Retail division, Innogy intends to counter this with additional efficiency measures and therefore currently maintains its outlook. The forecast does not take account of potential further regulatory intervention in the UK retail business, for example by way of a price cap on standard variable tariffs.”
The company said UK cost-cutting measures initiated last year were starting to bear fruit, “but the [UK] competitive landscape remains very tough in the retail business”.
After first quarter customer losses, the firm said it added 50,000 new customers in the second quarter – and pointed to a marked improvement in customer complaints. According to latest data, Npower now has the second lowest rate of complaints of the Big Six energy firms. In 2015, it had the highest (although it managed a slight improvement by the year end, which RWE noted when announcing new management).
Despite market challenges, Innogy said the overall business expected full year adjusted net income to increase by around 7% to €1.2bn.
See the statement here.