German energy firm innogy has been forced to slash its earnings forecast for 2019, with its UK-facing npower business of increasing concern.
Issuing its Q3 2019 results today, innogy confirmed it was revising its 2019 earnings forecast downward from €2.2 billion to €1.6 billion, pointing to performance from certain business units and the “significant structural effects” of its inclusion in a major asset swap deal struck between parent RWE and fellow energy company E.On.
While the company insisted this performance was as expected, troubles within npower in particular would appear to have worsened since the company’s last update in August.
At innogy’s H1 results, npower was stated to have posted a £75 million loss for the first six months of the year, with the impact of Ofgem’s price cap on standard variable tariffs hitting the division hard. Furthermore, the business had lost around 240,000 customers at the time.
But by Q3, npower’s loss for the year had spiraled to €167 million (£142 million), which the firm again attributed to regulatory interventions in the form of Britain’s price cap. Customer losses also soared, with the division losing 260,000 customers in Q3 alone, taking total customer losses in the year to 447,000, the company said.
Npower’s fate is still very much up in the air. It was intended to be rolled in with SSE’s retail division and listed as a new entity, but that deal fell through after the extent of Ofgem’s price cap was revealed and SSE has since moved on and struck a deal with challenger supplier OVO.
Npower will soon become E.On’s challenge, with E.On picking up the business unit as part of the aforementioned swap deal with RWE. E.On, however, has made no secret of its desire to avoid taking the business on long-term.
Losses were also felt within other divisions of innogy too. Its corporate and new business unit saw losses grow from €211 million recorded in the first nine months of 2018 to €261 million in 2019, particularly those from its Innovation Hub and emobility businesses.
Innogy’s Innovation Hub saw year-on-year losses from €9 million to €30 million after it was “significant undermined” by a weaker performance from its portfolio of investments in the year to date, while costs associated with the international expansion of its emobility arm saw losses rise from €30 million to €45 million.