Innogy cuts Npower value by €480m ahead of spin-off

The Daily Telegraph - Business - - Business - By Jil­lian Am­brose

NPOWER’s long-suf­fer­ing par­ent com­pany has taken a €480m (£427m) hit due to steadily ris­ing pres­sure in the house­hold en­ergy mar­ket, which has has­tened the group’s planned re­treat from the UK.

Germany’s Innogy said it would take the hefty write-down af­ter Npower re­ported a loss of £96m for the year to date, and the Gov­ern­ment’s price cap threat­ens fur­ther pres­sure to come.

Theresa May, the Prime Min­is­ter, has vowed to leg­is­late a cap on stan­dard en­ergy tar­iffs de­spite warn­ings that the move would wipe hun­dreds of mil­lions of pounds from the sec­tor, which is al­ready in­creas­ingly com­pet­i­tive due to an in­flux of new play­ers.

Innogy said the “dif­fi­cult mar­ket con­di­tions and po­lit­i­cal pres­sure have in­ten­si­fied over the course of the year”, which is likely to lead to fur­ther losses in Npower’s busi­ness be­fore it spins off the di­vi­sion to merge with SSE’s house­hold sup­ply unit. Npower made a pre­tax loss of €102m over the nine-month pe­riod, com­pared with a €81m loss in the same pe­riod last year.

The UK mar­ket “be­came even more dif­fi­cult” af­ter the Gov­ern­ment be­gan leg­is­la­tion to clamp down on en­ergy bills, has­ten­ing Innogy’s re­treat from the UK mar­ket.

Innogy and SSE ex­pect their planned exit from the mar­ket to be fi­nalised by late 2018 or early 2019. The new com­pany will be the UK’s largest elec­tric­ity sup­plier and a gas sup­plier sec­ond only to Bri­tish Gas in scale.

Paul Cof­fey, chief ex­ec­u­tive of Npower, said “scale and skill” will be key in suc­ceed­ing in the fu­ture en­ergy mar­ket fol­low­ing the merger.

Mr Cof­fey added the com­pany has man­aged to claw back 50,000 cus­tomers in the last quar­ter, com­pared to the months be­fore. It has also im­proved its cus­tomer sat­is­fac­tion score.

Mean­while, pres­sure is also pil­ing on French en­ergy gi­ant EDF, which warned in­vestors that its prof­its for next year are likely to fall be­low ex­pec­ta­tions. It had ex­pected earn­ings be­fore in­ter­est, tax, debt and amor­ti­sa­tion of at least €15.2bn next year, but now says a range of €14.6bn and €15.3bn is more likely. The com­pany will un­veil its third-quar­ter re­sults to­day.

Paul Cof­fey, Npower chief ex­ec­u­tive, said scale and skill will be key in suc­ceed­ing in the en­ergy mar­ket fol­low­ing the merger

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