Independent energy supplier Utilita Group saw its pre-tax profits fall by almost 20 per cent, despite reporting a 52 per cent increase in turnover for the 12 months to 31 March.
The company, which sells pre-paid electricity and gas, cited “competition levels” as one of the main reasons for its pre-tax profit falling from £25 million to £20 million for the period.
Utilita said it had made a “healthy” profit, but pointed to “tough times ahead” in an increasingly competitive market and “tough regulatory environment”.
Mike Smith, finance director at Utilita Group, said the company expects to take “another hit” on profits going forward because of Ofgem’s pre-payment price cap.
He told Utility Week: “The pre-payment price cap, which came into effect in April, will hit our profits going forward. But we are still profitable and are prepared to take another hit.
“We’re not giving up the ghost. We aim to give customers a fair deal while delivering good customer service.”
He said Utilita had gained new customers but also “lost some along the way”, which cost the company money and explained two price cuts had been introduced during the year.
“We have tried to swallow costs instead of passing them on to customers,” Smith said.
The group’s turnover rose from £271 million to £411 million from April 2016 to March 2017, while its customer base increased by 177,000 to 497,000.
Supply points went up from 617,000 to 936,000 in the period, but Utilita said it has since passed 560,000 households and 1 million supply points.
Bill Bullen (pictured), chief executive of Utilita Energy, said: “The period has seen unprecedented growth across the business with staff numbers more than doubling, turnover up 52 per cent and customer numbers reaching half a million.
“We are continuing to show how new entrants can be sustainable, competitive and profitable, while still giving customers value for money and good service.”
He added: “While we achieved a very healthy profit, it was down 20 per cent on the previous year – this points to potentially tough times ahead due to an increasingly competitive market and a very tough regulatory environment.
“However, I am confident we are in a very strong position to continue to grow the business and give Britain’s hard-pressed families a fairer energy deal.”
Last month, Utilita announced it would be freezing its prices until at least April 2018 and cutting some of its rates.