Innogy, the German energy company, said its UK gas and electricity business Npower would make a loss this year amid a “worsening market environment” and “extremely fierce competition” in the sector — even without the Conservatives’ proposed price cap on standard tariffs. Innogy said overall earnings rose 4 per cent to €1.62bn in the first quarter, on the back of a strong performance in its grid business, and it confirmed its guidance for the full year. But it said earnings at Npower declined 74 per cent to €34m in the quarter, as it lost customers in the UK and was forced to retain others by offering contracts at “much more favourable conditions”. Chief financial officer Bernhard Günther said the Conservative Party’s price cap proposal “and the general regulatory tendency that we’re seeing … aren’t making the UK more attractive for us as an investor”. Last year, Npower embarked on a two-year recovery programme which it said would lead to the loss of 2,400 jobs from its 11,500-strong workforce. Innogy said its UK arm had implemented more than half the £200m in cost savings envisaged up to the end of 2018, but that these were “far from sufficient to make up for the continued deterioration in market conditions and reduced margins”. It was therefore considering further efficiency measures.
FT 12th May 2017 read more »