Npower profits rose by more than a quarter over the first three months of 2018 as continued customer losses were offset by increased demand and reduced costs.
The supplier shed around 114,000 household accounts during the period due to “intense” competition in the retail market and fixed price tariffs coming to an end. At the close of March, the tally stood at 4.44 million – a year-on-year decrease of 66,000.
Revenues were up 10 per cent at £1,894 million as a result of higher consumption driven by the cold winter weather and a hike in the company’s standard variable tariff (SVT) last year.
The boost in sales, along with the ongoing effects of its cost-cutting programme, led to a 28 per cent increase in adjusted earnings before interest and taxation (EBIT) to £37 million.
Npower chief executive Paul Coffey said the results show the company is “building on the momentum gained during 2017”.
He lauded its improvements in customer service, noting that the supplier has been climbing up the rankings in external surveys: “Our score in Citizens Advice’s energy star rating is the best it’s ever been and over 30 per cent higher than it was when this data was first published in 2016.”
Coffey continued: “Although our results show signs of progress, this is mainly due to cost management as the market we operate in remains very competitive, which is putting real pressure on margins and customer account numbers.
“Wholesale costs, along with policy costs for the large and medium suppliers, are continuing to rise, as was reflected by our SVT price increase last week.
“The competitive landscape looks set to remain tough, and with policy changes on the horizon in the form of an SVT price cap, our focus has to remain on ensuring Npower continues to manage its costs strictly, building on the work started in its recovery programme.”
Coffey said the proposed merger between Npower and SSE’s retail arm is “progressing according to plan” following the Competition and Market Authority’s decision to refer the merger for a phase 2 investigation.
“This merger will create an independent, customer-focused company, offering customers a more efficient, improved service, and the recent appointment of Katie Bickerstaffe as chief executive designate of the combined company marks a key milestone,” he added.
“With her outstanding experience in retail and knowledge of the challenges the British energy market presents, Katie is best placed to build a new, independent, and, most importantly, customer-focused energy company, with the agility to adapt to the ever-evolving energy supply market.”
Coffey said Npower’s smart meter rollout is also on track: “Our SMETS2 pilot is progressing well and we’re well-positioned for a wider rollout later this year.”
Parent company Innogy reported a 6 per cent year-on-year decrease in revenues in the first quarter of 2018 to €11.63 billion (£10.26 billion). There was a 2 per cent fall in adjusted EBIT to €1,236 million (£1,091 million), although pre-tax profits were up 4.9 per cent at €1,176 million (£1,038 million).