Eon says it expects to see a “significant recovery” in the UK as a result of the restructuring of its supply business.
According to the group’s financial results for H1 2020 Eon’s UK supply arm almost doubled its revenue in the first half of the year to more than €7.3 billion (£6.6 billion) but adjusted pre-tax earnings were down €33 million (£29.8 million) to €43 million (£38.9 million).
The company blamed the “negative earnings” of Npower as well as warmer weather and the repercussions of Covid-19.
However speaking to investors on a conference call following the publication of the results Marc Spieker, the company’s chief financial officer, was asked about the outlook for the group’s customer solutions business.
Spieker said: “We do expect a recovery of our margins in customer solutions, but the mix and the nature will be completely different to the past.
“I think, to just make that transparent, look at the UK, which for this year is expected to be loss-making. And as we laid out, we will see a significant recovery in the UK, but that is not based on hope on recovering margins, but it is only based on the success measures which are under our control, and that is massive restructuring. So with it, our profitability in the UK will recover.
“But in terms of mix and composition, it will be completely different to what we had four, five years ago, i.e., a much lower cost base to cope then with much lower margins.”
Eon acquired Npower late last year, following a failed merger between the latter and SSE’s retail arm. A restructure of “unsustainable” Npower was then announced, with its domestic and small business customers being migrated to Eon, while the business solutions department was spun off.
Earlier this year the company announced it was to combine its business retail arm with Npower Business Solutions as part of the merger. Work to integrate the industrial and commercial arms is scheduled to complete by the end of 2021.