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npower Full Year 2017 Results

Highlights

  • Adjusted EBIT improved £34m year-on-year (y-o-y) to £(56)m, mainly due to the ongoing effects of npower’s Recovery Programme. By the end of 2017, the Recovery Programme had delivered £162m of actual savings and that saving is expected to increase by the end of 2018.. These cost efficiencies facilitated an improvement in EBIT despite the increases in energy policy costs during the period;
  • Revenue decreased by £76m relative to the full year 2016 figure due to fierce competition between suppliers. Customer churn in the UK was at its highest for several years and margins for new acquisitions were down. In this environment, customers continue to move towards more fixed tariffs. npower’s Standard Variable Tariff (SVT) customer base stood at 47% at the end of 2017 compared to 54% in December 2016;
  • Domestic customer accounts for npower saw one of the lowest reductions of the large energy companies, dropping by 155,000 y-o-y due to a loss of customers in the first quarter following the implementation of the SVT price increase in March 2017. npower gained accounts during the rest of the year, despite high levels of competition.
  • Smart installations: by the end of 2017, npower had installed a total of 428,088 smart meters, meeting targets agreed with Ofgem.

 

Adjusted EBIT

FY 2017
£M

FY 2016
£M

Change

£M

FY 2016
£M

FY 2015
£M

Change

£M

 

£(56)

£(90)

£34

£(90)

£(99)

£9

 

Revenue

FY 2017
£M

FY 2016
£M

Change

£M

FY 2016
£M

FY 2015
£M

Change

£M

 

£6,027

£6,103

£(76)

£6,103

£7,025

£(922)

 

Customer Accounts

FY 2017

(M)

FY 2016

(M)

Change

(M)

FY 2016

(M)

FY 2015

(M)

Change

(M)

Domestic Total

4.56

4.71

(0.15)

4.71

4.77

(0.06)

SME Total

0.17

0.18

(0.01)

0.18

0.19

(0.01)

Industrial & Commercial

0.23

0.23

0.00

0.23

0.22

0.01

 

Paul Coffey, CEO of npower, commented:

“2017 was a year of progress and we are looking to build on this momentum during 2018. While we’re disappointed to end the year with a loss, we delivered a double digit improvement in adjusted EBIT, the most significant increase we’ve seen in several years. We achieved a stronger bottom line despite a dip in revenue amidst a highly challenging market and political context, demonstrating how robust our Recovery Programme has been in delivering savings and improving efficiencies across the business.  

“We continue to perform better in customer service. In the third and fourth quarters, npower received the second fewest number of complaints per 100,000 customers of the large energy companies, and this figure has dropped by over 75% since the start of 2014. We are absolutely focused on maintaining this momentum.

“While we saw a 155,000 year-on-year decline in domestic customer accounts, these can largely be attributed to the first quarter. We gained customers during the rest of the year to partially offset the first quarter losses, which demonstrates the resilience of our business. 

“Energy supply remains an extremely competitive market. Rising costs and the changing regulatory landscape, such as the proposed SVT price cap, present all energy suppliers with real challenges. Our focus, therefore, is on ensuring that npower is best placed to meet current and future customers’ needs, and this is one of the key drivers behind our planned merger with SSE’s retail and energy services business.  This proposed merger is on track and we recently completed the work to start the CMA review process.

“Despite the challenges we face, we expect to build on the momentum we’ve gained over the last two years.”

 

(ENDS)

For further information please contact the npower press office on 0845 070 2807