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npower Nine Months 2017 Results

Following last week’s announcement that npower is to merge with SSE’s household energy and energy services business in Great Britain, npower reports steady progress in a challenging operating environment, with quarter-on-quarter account gains and further improvements in customer service.

Highlights

  • Adjusted EBIT was down £24m year-on-year (y-o-y) due to lower gross margins driven by the highly competitive market environment. The ongoing shift in our customer mix, with our non-standard customer base rising to 51%, was a large contributing factor. The results also reflect investments in programmes to support npower’s business customers;
  • Revenue decreased by £154m from the corresponding period of last year due to record high levels of UK customer churn, which has driven lower margins on new customer acquisition in both the B2C and B2B segments. The ongoing drive to reduce the proportion of B2C customers on standard variable tariffs was also a factor.
  • Domestic customer accounts: despite tough market conditions, customer numbers are under 90,000 lower than at the start of the year and, in both of the last two quarters, npower gained 50,000 accounts on a quarter-on-quarter basis.

 

Adjusted EBIT

9M 2017
£M

9M 2016
£M

Change

£M

FY 2016
£M

FY 2015
£M

Change

£M

 

£(89)

£(65)

£(24)

£(90)

£(99)

£9

 

Revenue

9M 2017
£M

9M 2016
£M

Change

£M

FY 2016
£M

FY 2015
£M

Change

£M

 

£4,264

£4,418

£(154)

£6,103

£7,025

£(922)

 

Customer Accounts

9M 2017

(M)

9M 2016

(M)

Change

(M)

FY 2016

(M)

FY 2015

(M)

Change

(M)

Domestic Total

4.61

4.77

(0.16)

4.71

4.77

(0.06)

SME Total

0.17

0.19

(0.02)

0.18

0.19

(0.01)

Industrial & Commercial

0.22

0.23

(0.01)

0.23

0.22

0.01

 

Paul Coffey, CEO of npower, commented:

“Last week’s announcement of the merger with SSE’s domestic retail operations is a direct reflection of the progress we’ve made so far. In order to be a really successful energy company, we need scale and skills – and this deal will deliver both.

“Looking back over the last nine months, the results of our hard work are starting to come through. While we have reported a loss of £89m year to date, the year-on-year changes for both revenue and EBIT are the smallest we have seen in 2017 so far and we expect to continue to close the gap during the remainder of the year.

“Our customer account numbers have continued to bounce back and we gained 50,000 customer accounts on a quarter-on-quarter basis, about the same number as in Q2. At the same time, we’ve seen further improvements in customer service, with CSAT reaching 74% in September. npower has also been  recognised by The Institute of Customer Service as one of the most improved UK companies in any sector.  

“While we look to the future with the new merger, it’s business as usual in the meantime: we will continue to explore ways of introducing engaging new products and services such as our new Go Green energy tariff . Our digital first supplier, Powershop, is continuing to innovate and is getting  ready to launch dual fuel in the coming months. In addition, with incentives in place to encourage the electrification of transport, we’re currently exploring  offerings for thee-mobility market.  

“Challenges remain both for our company and our industry more broadly, but these are exciting times for our people and our customers.”