Credit crunch dents Moneysupermarket

EARNINGS at the online price comparison group Moneysupermarket.com continue to be hampered by the credit crunch.

The company, based in Ewloe near Chester, saw revenue at its money division slump 10% last year as the flow of credit dried up. It has now promised a further round of cost-cutting.

Moneysupermarket saw sales growth in its insurance and travel businesses but said revenues had been hit by the credit crunch which has dented its money division, which sells mortgages, loans and credit cards. Sales dropped 10% to £68.3m.

In a statement it said: “The group noted during the year, and in particular the second half of the year, that lenders significantly tightened their lending criteria. Indeed a number of providers withdrew from the market completely as the credit crunch began to deepen, reducing the supply of available credit.

“This impacted all of the credit based channels but most markedly the secured loans channel, which also suffered as home equity declined with the falling housing market. First Plus, a subsidiary of Barclays, which was the group’s largest single provider by revenue in 2007 closed to new business in August 2008. First Plus represented approximately 10% of group revenue at the time it closed to new business.” 

The group posted adjusted figures for the year to December 31 to reflect restructuring at the group in 2007.

According to these figures revenue rose 10% to £178.8m but it made a post-tax loss of £59.1m after an impairment charge of £70m. This compared with a £9.4m profit last time.

But it said its “most meaningful profit measure” was its adjusted EBITDA (earnings before interest, tax, depreciation and amortisation). This figure fell 9% to £48.4m compared with £52.9m last time.

New chief executive Peter Plumb, who has replaced founder Simon Nixon, said: “Because of the recession, we are currently trading at levels well below last year. My first task is to reconfigure the business for this lower level of revenue. We will review the cost base, we will extract more value from lower online and offline marketing spend, we will re-engineer our systems and get closer to our providers and customers. 

“We have a strong market position, the internet continues to grow and we are the pre-eminent brand. The immediate task is to get leaner and more efficient, continue to generate cash and ensure the business is well positioned for when the recovery eventually comes.”

The group is paying a final dividend of 2.2p bringing the full year dividend to 3.5p per ordinary share.