Customer confidence showing signs of recovery says HomeServe
HOME emergency and maintenance business HomeServe has said its full year outlook remains unchanged with first half earnings expected to be flat in comparison to last year.
The Walsall-based business, still recovering from a mis-selling scandal, said in a trading update that it was continuing with marketing activity to try and claw back the customer numbers lost following the scandal.
Customer retention rates are said to be increasing and it is attracting new customers across its international operations.
“Our outlook for the full year remains unchanged. Earnings in the first half of FY2014 are expected to be broadly similar to last year (HY2013: £25.6m). As usual, trading will be weighted towards the second half of our financial year reflecting the seasonality of our marketing activity and the associated renewals profile although this will be partially offset by the expected reduction in the UK business,” it said.
In the UK, customer numbers stand at approximately 2.2m and it said it remained confident of achieving its full year target of 0.2m gross new customers, a retention rate of over 80% and stabilising year end customer numbers at 1.9m.
Importantly, considering the scandal it was involved in, it said it was also seeing improvements in customer service and satisfaction.
The investigation into the firm by the Financial Conduct Authority (FCA) is ongoing.
In its overseas operations, the company said that in the USA it had signed four new marketing agreements so far this financial year representing around 275k households. The business development pipeline is said to be strong with contract negotiations underway with a number of utilities. Customer numbers in the first half are expected to be around 20% higher than the same period in FY2013 and it said it remained on track to deliver strong growth in USA operating profit for the full year.
The seasonality of policy renewals, services and repairs in the USA business will, as expected, result in a small operating loss being reported for the first half of FY2014.
In France, its Doméo operation maintained a high retention rate of around 88% and customer and policy numbers remain stable, while in Spain, its Reparalia operation also saw growth in customer numbers.
It said it was also continuing to invest in, and develop its businesses in Italy and Germany. However, it reiterated that this division was expected to make a full-year loss of around £6m.
HomeServe said its overall financial position remained strong with net debt of £47m as of August 31, 2013.
