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OVO Group profit slides as costs soar

Image: OVO.

Image: OVO.

OVO Group revenues topped £1 billion for the first time in 2018, but the energy firm slipped to a loss for the year as its customer base grew.

Late last week the company filed its accounts for the year ended 31 December 2018 with Companies House, revealing that OVO Group recorded total revenue of £1.042 billion in the period, an increase of nearly 25% year-on-year.

But that performance was not enough to offset a collapse in profit. Having recorded an operating profit of £7.6 million in 2017, OVO Group slid to an operating loss of £51.5 million last year, resulting in a total trading loss of £42.8 million.

The firm did, however, state that it expects to return to profit in the coming years as it continues to grow, with further growth in customer numbers and an international expansion on the cards.

The firm now boasts more than 1.3 million customers, a figure which is set to surge should its proposed takeover of SSE’s energy supply arm receive regulatory approval. Its customer base grew rapidly throughout 2018 and early 2019 as it was appointed by Ofgem as the Supplier of Last Resort for a number of collapsed retailers.

That growth has, predictably, had an impact on OVO’s cost base. Increases in its cost of sale have outpaced revenue growth, rising more than 37% to some £948 million last year, while the firm’s headcount has almost doubled from 1,263 in 2017 to 2,110 last year.

As a result, total staff costs reached almost £70 million in 2018.

OVO is now plotting moves into international markets, targeting in particular countries in Europe and Asia-Pacific. This will be aided by the company’s decision to sell a 20% stake to technology giant Mitsubishi Corporation for £217 million.

The directors stated that Mitsubishi and OVO’s cultures and long-term vision for the energy sector aligned well, making the deal a sensible move to put OVO “at the forefront of the global, tech-enabled transition to a zero-carbon energy system”.


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