Moneysupermarket profit rises but outlook disappointing

Moneysupermarket.com posted an increase in full-year profit on Thursday as revenue grew and the insurance segment put in a strong performance, but shares in the FTSE 250 price comparison website tumbled as investors were left disappointed by its 2018 outlook.

In its preliminary results for the year to the end of December 2017, the group said pre-tax profit rose to £96.1m from £91.3m the year before, on revenue of £329.7m, up 4% as strong insurance growth was offset by lower energy switching.

Adjusted earnings before interest, tax, depreciation and amortisation were up 5% to £127.2m, while adjusted earnings per share came in at 16.9p, up from 15.7p in 2016. Customer savings rose 10% to an estimated £2bn as the company helped its customers to find better products and the total dividend for the year was lifted 6% to 10.44p.

The insurance business saw revenues grow 12% in the year to £173.6m, while the money arm saw a 3% rise in revenues to £81.2m. Home services saw a 22% drop to £39.6m, however.

Revenues in MoneySavingExpert.com were up 13% to £41.5m, while TravelSupermarket.com saw a 4% increase to £22.2m.

Moneysupermarket also announced that it will invest £5m to build out its product engineering teams, focused on customer experience optimisation. Its core markets are expected to grow at around 6% to 7% and the company reckons its growth could be slower than that in 2018, accelerating afterwards.

It said it has started the year at a similar growth rate to last year, meaning that adjusted EBITDA for 2018 should be broadly flat before growth resumes from next year onwards.

Chief executive Mark Lewis said: "In 2017, customers saved more through us than ever before - £2bn. And we're not stopping there. We are committed to leading the way in price comparison to make saving with us easier, quicker and simpler. Our goal is to offer our customers ways to save that they didn't know existed and to do so in a way that is as effortless as we can make it."

RBC Capital Markets said adjusted EBITDA was 1% below consensus, while revenue was 2% below its £335.5m forecast and 1% weaker than consensus expectations of £334.7m. It also said that the company's 2018 outlook was weaker than expected.

"The medium term plan for Moneysupermarket seems sensible, and shows that the company is aware of the challenges and opportunities that lie ahead. However, 2018 is likely to be disappointing for earnings. The company has flagged that revenues are likely to grow slower in 2018 with growth year to date at around 4% compared to consensus expectations of 6.7% but in line with our 2018E estimates.

"Adjusted EBITDA is expected to be broadly flat year on year, before returning to growth in 2019. This implies a 9% reduction in consensus adjusted EBITDA expectations and around 7% to our 2018 estimate of £136.3m."

At 0855 GMT, the shares were down 25% to 247.30p.