Telecom Plus boasts record profits thanks to failure of competitors
Utility Warehouse group Telecom Plus posts record profits as competitive failures drive strong customer growth
- Revenue at Telecom Plus skyrocketed by over £1.5bn to a record £2.48bn
- UK energy bills skyrocketed at the end of 2021 and the first half of last year
- The company also announced an increase in final dividend to 46 pence per share
Telecom Plus hailed its best annual performance ever after the multi-utility supplier’s customer growth was outpaced by competitor failures.
Turnover of the FTSE 250 company – which trades as a Utility Warehouse – skyrocketed by more than £1.5bn to a record £2.48bn for the 12 months ended March, with almost all of the growth coming from higher electricity and gas revenues.
Statutory profit before tax rose 81 per cent to a record £85.5 million, while Telecom Plus passed on more than £30 million in energy savings to consumers.
Performance: Revenue at Telecom Plus – which trades as a Utility Warehouse – skyrocketed by more than £1.5bn to a record £2.48bn for the 12 months ending March
The rise in energy prices due to the war in Ukraine and the end of Covid-19 restrictions led to the collapse of multiple energy suppliers, with many of their customers subsequently applying for Utility Warehouse’s energy services.
But the company has also seen stronger demand for its broadband, insurance and cashback card offerings.
This helped the group far exceed its internal targets last year, with a 22 percent growth in customer base and a 24 percent increase in service revenue.
However, earnings were dampened by higher personnel, technology and infrastructure costs during the reporting period.
“This has been an outstanding year for the company,” said Andrew Lindsay and Stuart Burnett, joint CEOs of Telecom Plus.
“The fundamental strengths of our business model have reaffirmed and delivered a strong performance for all our stakeholders – especially our customers who benefited from the lowest energy prices in the country throughout the year.”
Telecom Plus Shares jumped 7.55 per cent to £16.24 on Tuesday afternoon, making them the biggest gainer on the FTSE 250 Index.
It also announced a final dividend increase to 46 pence per share, compared to 30 pence for 2022.
For the current year, Telecom Plus expects a ‘modest’ headwind from the recent drop in the Ofgem price cap, but also a ‘comfortable’ double-digit increase in customer numbers.
This, it says, will lead to a “broadly corresponding” increase in adjusted pre-tax earnings.
Russ Mould, director of investment at AJ Bell, said: ‘The failure of energy suppliers such as Bulb, Ampower, Igloo, Hub Energy and many, many more has left many households in trouble, but many of them have help from Utility Warehouse’
“As a result, the FTSE 250 business looks forward to healthy continued customer and profit growth in the year to April 2024, even after a record 12-month period.”