Moneysupermarket says energy switching ‘unlikely’ to return in 2023

Moneysupermarket.com earnings jumped over the past year, driven by a solid recovery in its travel arm as pandemic restrictions were lifted.

However, the group warned the consumer energy switching market, which is traditionally a powerful driver of MSM revenues, will not bounce back in 2023. 

The price comparison website’s pre-tax profit for the year to 31 December came in at £85.2million, against £70.2million the previous year, preliminary results show.  

Sales for the year reached £387.6million, up 22 per cent from £316.7million the previous year, while the total dividend was held at 11.71p.

Experts at Cornwall Insight say cheaper fixed-rate deals could make a comeback this year, and possibly even within the next few weeks.

This, it says, is because the price of energy should fall and reduced Government help with bills could spur suppliers to be more competitive.

Energy switching had become an increasingly important part of MSM’s business, helping to drive a 70 per cent increase in revenues across its Home Services arm in 2019 after the acquisition of Decisions Technologies.

But the segment has been decimated by record-high energy prices and related government support effectively bringing a temporary stop to consumer energy competition.

Home services revenues, which includes energy supplies, fell 42 per cent to £40million last year as the UK government’s energy cap stopped customers from switching providers. 

But revenues across its travel arm showed the biggest percentage increase over the year, climbing 265 per cent to £15million.

Money revenue jumped 37 per cent to £103.3million, while insurance operations rose 8 per cent to £172million.

The group’s operating cash flow increased to £104.4million, up from £65.7million a year ago, while net debt fell to £37.2million, down from £59.6million a year ago.

Its active user base increased to 11.1million from 10million, with a slight dip in the average revenue generated per user from £16.90 to £16.40. 

Moneysupermarket shares fell to 214.80p early this morning and were down 1.04 per cent or 2.44p to 232.96p this afternoon.  

Peter Duffy, the group’s boss, said: ‘I’m pleased to report a strong return to revenue and profit growth as we build strategic momentum. 

‘The progress we’ve made gives us the foundation for more product innovation which, amid a tough macroeconomic climate, will help households find even more ways to save with our portfolio of trusted brands.’

Looking ahead, the group said: ‘The first few weeks of 2023 have seen similar trends as in Q4 in Insurance and Money. 

‘As previously guided, the ongoing conditions in the energy market mean it is unlikely that switching will return in 2023. 

‘On this basis the Board is confident of delivering market expectations for the year.’ 

Russ Mould, investment director at AJ Bell, said: ‘Moneysupermarket served up many right answers with its latest numbers but the market has given it a D-minus after picking holes in the results. 

‘Revenue and profit are both up by double-digits and net debt has come down a lot. That’s simply not enough to get a winning grade judging by the 7 per cent dive in the share price.

‘There have been some suggestions in recent days that energy switching activity could restart from July. 

‘Moneysupermarket has poured cold water over that thought by saying it is unlikely that energy switching will return this year, and that’s likely to have spooked investors hoping for a big part of its business to start earning again.

‘The other negative is the lack of dividend growth which suggests Moneysupermarket is being cautious until all parts of its business are firing on all cylinders again.’

Fiona Orford-Williams, a director at Edison Group, added: ‘Key to driving longer-term value will be increasing customer life-time value, which means more cross-selling of different product lines. 

‘The balance sheet is well-resourced, with net debt reduced to £37million from £60million, and the dividend is maintained at 11.71p.’