Customer defections lead RWE to post loss at UK biz

Bloomberg

RWE AG’s UK unit will reduce its workforce by 21 percent after reporting a full-year loss and a customer exodus amid billing system failures. Germany’s biggest power producer posted its second net loss in three years.
Npower’s operating loss was 137 million euros ($151 million) compared with a profit of 227 million euros a year earlier, the Essen, Germany-based company said Tuesday in a statement. The group’s net loss amounted to 170 million euros compared with a profit of 1.7 billion euros in the previous period.
The company is restructuring its U.K. unit, shedding 2,400 staff as part of a two-year recovery program aimed at cutting costs and improving customer service in its second biggest market. Npower lost 207,000 electricity customers and 144,000 gas customers last year, about the same as in 2014.
“What happened there was a disaster,” Chief Executive Officer Peter Terium told reporters in Essen. “We hope to be out of the valley of tears in the U.K. by 2018,” he said.
Britain’s regulator in December said Npower was required to pay 26 million pounds for failing to treat customers fairly after billing issues affected more than half a million customers.
After “lots of problems with invoices and billing,” the restructuring program should bring the unit back to profit by 2018, Chief Financial Officer Bernhard Guenther said in an interview on Bloomberg Television.
The U.K. unit’s “low point is reached, now things will gradually get better,” said Sven Diermeier, an analyst at Independent Research, said by phone from Frankfurt.
RWE fell for a third day, sliding 4.4 percent to close at 10.79 euros in Frankfurt. The stock has dropped 7.9 percent this year, compared with a 9.8 percent decline in Germany’s benchmark DAX index.