HomeServe, the struggling home emergency insurance and repairs group, has said that full-year profits will be in line with market expectations, which have come down slightly since the group's last update.
The company, which has been dogged over mis-selling issues for the last six months, said that analysts' forecasts for adjusted pre-tax profit for the year ending March 31st range from £116m to £128m, the average of which is £124m. Just last month, the company said that profits would be in-line with market estimates of between £122m and £132m (average: £127m). These figures are 'adjusted' for exceptional items including £20m of one-off costs relating to "reinvigorating its customer focus" in the UK and gains from acquisitions.
The stock tanked in late October after the firm announced that it was temporarily suspending its UK sales and marketing activity following a review by audit firm Deloitte found "processes that did not meet the company's required standards." HomeServe has finally received formal written feedback from the FSA which was called in to investigate and are implementing changes consistent with their feedback.
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The company has yet to fully restart its outbound telephony pilot focused on cross-selling to existing customers but has said that it close to completing preparations. Meanwhile, inbound calls from its water and manufacturer warranty affinity parter customers have been gaining momentum.
New acquisition mailing campaigns, which were sent in January, have seen a lower response rate than expected. As such, customer numbers for the year are expected to be 9% lower than the previous year, compared with the 8% decline previously anticipated.
At HomeServe's other operations in the US, France and Spain, customer numbers and policies have increased strongly and retention rate remains strong.
Net debt at the year-end is expected to be £70m, compared with £11.8m the year before, as a result of December's deal to buy Veolia's 51% shareholding in French firm Domo for £83m.
BC
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