Utility Warehouse believes there is more growth to come from bundling communications and energy services to customers and is considering boiler installation, services and breakdown cover while maintaining a “watching brief” on TV packages.
However, the firm’s half year results to 30 September show slowing growth and a dip in its business members.
Although residential customers increased slightly to almost 585,000 members, business customers declined 3.8% year on year. It now has 28,158 business customers versus 29,283 a year earlier.
But following the sale of Opus Energy to Drax last December, in which Utility Warehouse owner Telecom Plus held a 20% stake (worth £71m), the company said it now has “particularly strong balance sheet” which it may use to pursue strategic opportunities as well as buy back shares.
Meanwhile, with most of its customers on standard variable tariffs, CEO Andrew Lindsay believes the proposed standard variable tariff (SVT) price cap proposed by government represents an opportunity to “materially improve our competitive position, and act as the catalyst that takes our growth rates back towards the double-digit levels we have historically achieved”.
The company reiterated warnings that suppliers without sufficient balance sheet coverage may damage the broader energy market and its players.
“Since 2013 there has been a rapid increase in the number of sub-scale and unprofitable independent energy suppliers, with little to differentiate themselves from each other, competing solely on price, and typically using price comparison sites to acquire new customers; it is no surprise that their churn rates are now running at annualised rates of over 30%, and that the larger ones are finding further growth (or indeed achieving an acceptable and sustainable positive return on their investment) increasingly difficult to achieve,” according to the company’s outlook statement.
“Questions remain over the long-term value that this large number of undercapitalised and inefficient sub-scale competitors are bringing to the domestic energy supply market, and their ability to meet their ongoing responsibilities as regulated energy suppliers.”
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