Moneysupermarket FY profit rises, announces £40m share buyback

Price comparison website Moneysupermarket.com posted a rise in full-year profit as revenue grew and it announced a £40m share buyback.

For the year to the end of December, profit before tax rose to £91.3m from £79.8m the year before as revenue increased 12% to £316.4m.

Adjusted operating profit was up 8% to £107.8m and adjusted earnings per share came in at 15.7p from 14.5p.

The company lifted its dividend by 8% to 9.85p per share and announced a £40m share buyback programme.

Chief executive officer Peter Plumb said: "We saved nearly seven million families £1.8bn on their household bills in 2016, which helped us grow revenues by 12%. This adds up to another great year for the Moneysupermarket Group. We increased the dividend 8% and are announcing a £40m share buyback.

"Our technology investment programme is equipping us to save more families more money on a wider range of bills in the years ahead. Using data to make comparison more personalised, more informed, quicker and easier is differentiating us from other comparison sites."

Shares in the company were down 8.3% to 322.01p at 0848 GMT, with a number of factors likely to be taking their toll.

Shore Capital said it was pleased by the strong performance indicated in the release, but some investors may be disappointed that the company has decided to distribute excess cash by way of a buyback programme rather than a special dividend, as it has done in the past.

"That said this policy should enhance earnings per share, add an additional prop to the share price and have a longer lasting impact," it said.

Also likely to be weighing on the stock was the fact that Moneysupermarket said group revenues are currently behind last year, although it did stress it is confident of delivering on full-year expectations.

"Insurance revenues and the core Money business (credit cards and loans) delivered strong growth in the first two months of the year. Low interest rates continued to weaken savings and current account switching and Energy is trading lower, as we have not yet run a collective switch. Consequently, group revenues are currently behind last year."

This is something that was picked up on by Credit Suisse, which cut its stance on the stock to 'neutral' from 'outperform' following the results.

"Overall we see the FY16 results as solid and in-line with expectations. Whilst we do see the group's Jan/Feb trading as disappointing we expect an improvement in performance through the year thanks to easing comps and our expectation that the group will manage one or two collective switches in the year (likely Q2 and maybe Q4).

"We see the group's gross margin guidance as slightly disappointing and believe the market will want to see further evidence that the group's ongoing technology investment will aid the group to expand margins over the medium term."

Moneysupermarket said the group gross margin was 73% in the second half and it expects the margin will be similar going forward.

RBC Capital Markets said: " Capital returns surprised us positively but the outlook for the first two months of 2017 is cautious. Questions today will likely focus on how much of the revenue pressure in the first two months of 2017
is cyclical versus structural."