5th Feb 2014 08:03
LONDON (Alliance News) - Home emergency services provider HomeServe PLC Wednesday said its expects its full-year pretax profit, excluding exceptional items, to meet market expectations as it said its UK business was starting to stabilise following its recent struggles.
The company confirmed that it has set aside a further GBP30 million after the UK financial regulator proposed a higher-than-expected penalty related to certain of the home insurer's past sales and marketing activities and complaints handling. It has set aside GBP34.1 million in total.
The company offers home emergency insurance products to cover issues like plumbing or drainage problems, or boiler breakdowns. Its reputation was hit after the regulator said it had mis-sold policies, and customer numbers dropped sharply as it temporarily suspended telephone sales and launched a review into its marketing and staff training programmes.
In a trading update, the company said its UK business was continuing to trade in line with expectations. It said customer numbers at the end of December were 2.1 million, giving it greater confidence that the business will stabilise its customer numbers at above 2.0 million.
"While currently in the peak renewal period, recent product enhancements and improved customer satisfaction are delivering a good retention performance and we expect full year retention to increase from the 81% reported in the first half of the year," the company said in a statement.
It warned that the increased cost of the product enhancements, a higher number of new customers, and providing better customer service is expected to reduce its net income per customer compared with last year.
It said it has increased marketing activity, which is performing as hoped, while the costs of its customer re-contact programme is also performing in line with hopes.
In the US, Homserve expects customer numbers at the end of March this year to be about 15% higher than a year earlier. Growth was 25% in its 2013 financial year. It said it was also experiencing strong retention, with the rate rising to 80% in the current financial year, from 79% last year.
Elsewhere, the retention rate remains strong in France, and customer numbers are expected to double this year in Spain.
In its new markets, it said it's making good progress developing its sales channel and marketing activity in Italy, while talks are continuing with potential partners in Germany. It expects the new markets unit to report a full-year adjusted operating loss of about GBP6 million.
The company's shares were up 4.2% at 320 pence at the open Wednesday, one of the top gainers on the FTSE 250.
By Steve McGrath; [email protected]; @SteveMcGrath1
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