Big Six energy firms ‘asleep’ and should be worried, Yu Group chief warns after record profits
The Big Six energy are “asleep” and should be worried about challengers scooping up their customers, argued the boss of Yu Group, following the company’s bumper results this year.
Bobby Kalar, chief executive of Yu Group, which provides gas, water and power to businesses across the UK, told City PM, that his firm was thriving by “picking contracts from the Big Six” who were complacent with their offerings to customers.
The big six energy firms Centrica-owned British Gas, EDF Energy, EON, Npower, Scottish Power and SSE.
He said: “They should be worried about challengers coming and taking their customers and growing – with the controls, guidelines and governance that comes with a very disciplined and a mature challenger brand.”
Kalar highlighted the example of British Gas owner Centrica, which made a £3.3bn profit last year through its generation arm, but made losses on its retail arm to households and businesses.
Referencing his firm’s innovations, he revealed Yu Group was doubling down on its digital offering – known as Yu Smart.
The supplier is aiming aim of creating a smart metering platform for businesses that gave real-time information over energy usage, customer habits and key areas of consumption that can be accessed on smartphones and tablets.
Ahead of tomorrow’s Budget, energy boss also called for business support to be maintained at current levels for the next six months, and the roll-out of the more modest Energy Bills Discount Scheme to be pushed back until later this year.
This was because businesses typically purchased energy on long-term contracts and the effect of fallen gas prices on the market would not be felt until later in the year.
He said: “Remember, customers who signed up in third and fourth quarters last year will still be paying these very high wholesale prices into the second half 2023. I think the government should look at that. I think they should continue to offer much needed much appreciated support to businesses in terms of the EBR scheme – however long we can extend that out would absolutely receive my vote.”
Yu Group unveils record profits but shares slide
Kalar’s comments come as Yu Group announces its full year results for 2022, revealing a record pre-tax profit of £5.8m while other suppliers scramble to avoid losses, up from £3.4m 12 months ago.
Revenue rose to £278.6m from £155.4m a year prior, while the board has reinstated a progressive dividend policy with a final dividend of three pence per share.
Liberum has maintained its buy stance with a target price of 900p per share.
It said: “Full year earnings per share of 30p was strong and in line, despite a prudent bad debt provision and a £1.1m deferred tax charge. Net cash (excluding leases) increased from £15.7m in the first half of 2022 to £19m at the end of the year, despite the c. £16.5m renewable obligation payment. We maintain our earnings per share and cash estimates.”
Amid the energy crisis, Yu Group has taken on energy users from fallen firms during the recent market crisis.
This includes business customers from Ampower, Whoop Energy and Xcel Power Limited.
Despite the strong headline results, the company’s shares were down 15.48 per cent on the London Stock Exchange, reflecting the gloomy economic outlook and the volatile nature of the FTSE AIM All-Share.