Utility Warehouse CEO: We won’t follow Octopus’ example on growth

Utility Warehouse’s co-chief executive insists the company can become one of “Big Six” energy retailers without “upsetting the apple cart”.

Stuart Burnett told Utility Week that while Utility Warehouse has no “ceiling”, it will resist the temptation to rapidly scale up in the way Octopus Energy has over the past eight years.

In particular, Burnett said the company will not pursue growth through acquisitions nor will it look to “make controversial statements” about the make-up of the market.

Burnett made the comments after his firm posted record profits for the year ended 31 March 2024, with adjusted pre-tax profit up 21.5% to £116.9 million.

Utility Warehouse currently has more than 1 million customers, with the vast majority of the multi-service provider’s customers (more than 900,000) also being energy customers – that represents a 3% market share and makes Utility Warehouse the seventh biggest energy supplier.

With ambitions to grow to 2 million customers in the medium term, Burnett told Utility Week that he doesn’t “see any ceiling to our growth opportunity”.

Yet he remained cautious as to how Utility Warehouse will achieve its growth ambitions, insisting he would not pursue growth through acquisitions as companies like Octopus have done in recent years.

Octopus recently surpassed British Gas as the largest electricity supplier in the UK, just eight years after entering the market. The company now supplies electricity to just under a quarter (22%) of all UK households, with a 1.9 million increase in its customer-base recorded in the past 12 months.

Asked whether the goal was to grow to the size Octopus has in the long term, Burnett said: “The opportunity in front of us is huge, the key thing is that we’re not looking to acquire just energy customers, we’re looking to acquire multi-service customers and because there’s nobody else out there with our model, there aren’t other multi-service businesses out there that we could acquire.

“Some of the suppliers that have grown the fastest have done that in part through acquisition, by buying… Octopus bought Bulb, they bought the Shell base, and they acquired some smaller customer bases out of the Supplier of Last Resort process, as well as acquiring customers organically.

“We acquire all of our customers organically and critically, we do it through word of mouth and that recommendation.”

Burnett also pointed out that Utility Warehouse and Octopus have different approaches when asked about their differences in style.

He added: “We aren’t a business that is looking to maximise short term trends or to upset apple carts or make controversial statements.

“We’re a provider of essential household services ultimately, when you break it down, and that means you need to be a really reliable, trusted, long term partner. Not just for your customers, but for your employees and for all of your wholesale partners that you work with across the industry as well.”

Utility Warehouse attributed its profits to the growth in its customer and service numbers, and a “modest tailwind” from higher energy prices in Q1 compared with the remainder of FY24.

Meanwhile Ofgem’s price cap has averaged £2,140, compared to £3,100 in 2023. This reduction, the company said, led to a fall in overall revenues for the business to £2 billion, compared to just under £2.5 billion in 2023 “notwithstanding a significant increase in service numbers and higher revenues from non-energy services”.

Commenting on the results, Burnett said: “We are delighted to have delivered another year of record customer numbers, record profits and record returns to shareholders – all through helping households to stop wasting time and money.

“Our unique multi-service model means we can continue to provide market-leading savings and sustainably outcompete within each of our core markets. At the same time, the additional income opportunity we provide to partners for recommending UW to their friends and family has never been more in demand.

“With the business in such good health, and having passed through the 1 million customer milestone, our current rate of growth places us firmly on track to double the size of the business to two million customers over the medium term, with a commensurate increase in profitability and shareholder returns.”

Burnett is currently Utility Warehouse’s co-chief executive alongside Andrew Lindsay. Following the company’s AGM this August, Lindsay will step down from his role after 16 years with the business, making Burnett the sole chief executive.