Fulcrum’s turnaround hampered by energy market crisis

Utility services provider Fulcrum is being hit by the direct and indirect consequences of the turbulence in the energy market as it attempts to turnaround its own fortunes.

Energy supplier E has agreed to terminate Fulcrum’s smart meter exchange and management contract.

Several of Fulcrum’s other energy supplier customers and one of its subcontractors had collapsed, which left Fulcrum “unable to service the contract in a manner to maintain the contract’s profitability”.

Fulcrum’s share price dropped 25% in early trading and has now fallen 80% since the start of 2021.

The Sheffield-headquartered group brought in Antony Collins as an experienced turnaround chief executive in January, weeks after the company raised £20m.

Around the same time entrepreneur Jonathan Turner’s Bayford Group increased its stake to 27%, taking a sizable chunk off another fellow non-executive director Jeremy Brade’s Harwood Private Equity.

Fulcrum is expecting to now report annual earnings, as measured by adjusted EBITDA, of £0.5m. This is despite a 22% rise in revenues to £57.4m in the year to March 2022.

Its multi-utility contracting business has “remained relatively unaffected” by the problems in the energy market but is being hit by supply chain pressure and cost inflation.

It also expects its order book “will soften” while market conditions remain difficult.

Collins said: “Despite the challenges presented by both the UK’s energy crisis and wider difficult trading conditions, I believe that Fulcrum has the essential capabilities needed to be successful in what are exciting and growing markets.”

Fulcrum’s network of utility assets is worth £36m and it said it continues to “generate recurring income and provide attractive and predictable long-term returns”.

It is also reviewing “several” opportunities to “acquire asset portfolios at attractive valuations”.

“The new executive team is actively reviewing the group’s activities to ensure optimal performance and to identify opportunities to improve profitability and to deliver long term, sustainable growth for the benefit of all shareholders,” said Collins.

“The board is confident that the group remains well positioned to support the expansion of the UK’s energy infrastructure, by providing services that are essential to the UK as it transitions to a net-zero future.”