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