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Suppliers struggle for profitability

Oliver Archer Analyst

This week many suppliers have agreed a series of measures to ameliorate the effects of the Corona Virus on vulnerable consumers. This is no doubt the right thing to do but will come at a cost. In what position are they to take this cost? This Chart of the Week takes a look at financial accounts from licensed suppliers covering 2018-19, discussing profitability in today’s energy supply market. A first reading of the available 2018-19 accounts (some are yet to be published, others do not include profit and loss) does suggest an industry struggling to realise profits, for a range of reasons specific to supplier size and strategy. Figure 1 shows the 15 businesses which have published these reports recording an aggregate operating loss of £23mn. British Gas and Scottish Power, the two large suppliers that have already published financials for 2019, together made an operating profit of £178mn, though both recorded significant reductions year-on-year in profitability and noted the negative impact of the default tariff cap. Among the six medium suppliers whose financial metrics have been aggregated in Figure 1, only Utility Warehouse reported a profit, and as a group these suppliers made a collective operating loss of £159mn.  Prepayment specialists E and Utilita fell into losses in the 12 months ended March 2019, both citing the impact of the prepayment cap, and Octopus Energy, Bulb, and So Energy reported deepening operating losses as the suppliers invested in growth and technology development. As well as a difference in operating ...

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