Npower blames price cap for Q1 loss as customers depart

Npower saw 103,000 customers depart in the first three months of the year and reported losses before interest and tax of €45 million (£39 million).

The company, which is owned by Innogy, blamed the introduction of the price cap in the UK on its poor performance, which compared to a profit of €43 million for the same period last year.

The big six supplier said the cap and customer losses “curtailed earnings” along with provisions for both severance payments in connection with a new restructuring programme.

Revenue meanwhile fell 5.6 per cent to €2 billion and the company expects Npower’s full year adjusted earnings before interest and tax to be a loss of €250 million.

The results also showed a rise of employees, with 359 more employees at the end of March than three months previously.

In January however the company announced around 900 jobs were due to be cut because of the “extremely tough UK retail energy market conditions”.

Npower said the actual number of redundancies “will be considerably lower” as around 900 people leave the company annually.

Bernhard Günther, chief financial officer of Innogy SE, said: “Despite the unusual situation in which we find ourselves with the planned transaction between Eon and RWE, we are continuing to focus on our operational business.

“This is reflected in our figures: since the beginning of the year we have seen an increase in customer numbers in our German retail business, even though the market environment remains difficult. The rise in customer numbers is not yet shown in the result.

“But we have created a good basis for the further development of the fiscal year. Factors contributing to the improved result for renewables include a higher market price level and new capacities which were commissioned in 2018.

“Overall, business development in the first quarter was in line with our expectations. We confirm our outlook for 2019.”

Overall Innogy’s adjusted net income was €407 million, down from €610 million at the same time last year.

Adjusted earnings were down 22 per cent year on year.

Last month Innogy’s chief executive Uwe Tigges said the continued difficult market conditions for Npower, are a reality the company does not want to “ignore”.

Speaking at Innogy’s annual general meeting (AGM) in Essen, Germany Tigges said that operationally Innogy is “on track” and the business is progressing as planned.

“The only exception, which unfortunately cast a major shadow over fiscal 2018, is our UK retail business,” he said.

Npower was given the green light to merge with SSE’s retail arm SSE Energy Services but the two companies called off the deal late last year due to “adverse developments” in the retail market and “regulatory interventions” such as the price cap.

In a trading update posted yesterday (13 May) British Gas owner Centrica said a “challenging trading environment” such as the price cap, warmer weather and falling gas prices will impact its financial performance in the first half of 2019.

In the update issued before its annual general meeting the company blamed the cap as the reason it lost 234,000 British Gas accounts in the first four months of the year.

Fellow big six supplier Eon also said its retail arm in the UK remains under “considerable pressure” owing to “keen competition” and the price cap on default tariffs.