HomeServe to cut 300 jobs as customer numbers decline

Home emergency repairs group HomeServe said it is on target to hit full-year forecasts but has warned that a fall in customer numbers next year will lead to the loss of 300 jobs.

Chief Executive Richard Harpin said in a statement on Friday that HomeServe will meet expectations for the year ending March 31st 2013 with UK customer numbers at around 2.25m, within the guidance range of 2.2m and 2.4m given at the half-year stage.

He said that there has also been "strong growth" in the International business with customer numbers rising by 20% in the US and over 30% in Spain.

However, the UK customer base is predicted to "stabilise at around 1.9m customers by March 2014 and this will reduce the UK financial performance in FY14 and FY15.

"As a result we are announcing the loss of 300 roles in the UK business. With the continued strong growth in our International business, this will allow the group to return to modest growth in FY15."

The job losses mean that the company will take a £4.0m charge in its full-year results. Meanwhile, it has had to write-down the carry value of its French warranty business SFG to reflect challenging conditions in the electrical retail market and will also realise an impairment of £15m.

Nevertheless, pre-tax profits for the current year (ending March 2013) are still expected to be in line with analysts' forecasts which range from £102.9m to £110m (average: £105.7m).

FSA probe ongoingHomeServe is still under investigation from the Financial Services Authority (FSA) over "certain historic issues" to do with its outbound marketing activity which forced it to temporarily suspend UK sales and market activity in October 2011.

This has since restarted but the FSA probe is expected to continue for a "number of months", the firm said on Friday.

"Our UK business is making progress improving the effectiveness of its sales and marketing activity and we have clear plans for increasing both customer acquisition and retention over the next two years," Harpin said.

The company admitted that this improvement has taken longer than originally expected to implement.