Record profit growth at Walsall group HomeServe
HomeServe, the Walsall-based household repairs group, has revealed record profits growth boosted by a strong performance in North America.
While customer numbers have remained stable in the UK, at around 2.2 million, in the USA they soared by 20 per cent to 3.6 million.
It helped push group revenue up 15 per cent to almost £900 million for the financial year to the end of March, while pre-tax profits jumped 25 per cent to £123.3 million.
Founder and chief executive Richard Harpin said: "This has been another great year for HomeServe, with record profit growth and another step change in our growth in North America."
The company, which employs around 1,100 at its Green Lane headquarters in Walsall, also completed its takeover of Checkatrade during the year in a £54m deal – part of its development of an online, on-demand Home Experts marketplace.
HomeServe offers insurance repairs for everything from burst pipes and broken boilers to dodgy wiring and faulty fridges and jammed locks. It works in partnership with utility businesses such as water companies, offering its services to their customers.
In North America adjusted operated profit more than doubled, up 146 per cent to $64.4m. In the UK, however, adjusted operating profit slipped back by £2.1m to £61.1m as the business invested to increase efficiency and expanding its operations in heating and its LeakBot digital leak detector.
Meanwhile, it saw double digit growth in both its French and Spanish operations.
Mr Harpin added: "Our core Membership proposition continues to resonate strongly with consumers seeking to run their homes more easily, and we are delighted to serve 8.4m customers worldwide at an annual policy retention rate of 82 per cent.
"We have made good progress this year on developing three new business lines – Home Experts; Heating, Ventilation and Air Conditioning (HVAC); and Smart Home.
"In HVAC we completed acquisitions in the UK and France and in Smart Home our LeakBot innovation is starting to gain real traction with insurers. I am particularly excited by the progress we have made on developing our online Home Experts marketplace since we acquired 100 per cent of Checkatrade in November 2017."
And there is a boost for investors as well, as the proposed final dividend payout to shareholders of 14.4p takes the final dividend for the year to 19.1p per share, a rise of 25 per cent.
Looking ahead the company says it has 'good prospects' for growth this year across all the countries where it operates, particularly in North America.
Back in Britain, the company has confirmed that Martin Bennett, the chief executive of its HomeServe UK business, will step down from the board at the AMG on July 20 and leave the business later in the year.
Company chairman Barry Gibson said: "On behalf of the noard I would like to take this opportunity to thank Martin for his service to HomeServe.
"Martin has made an outstanding contribution to HomeServe over the last 15 years, and in particular since his appointment to the board in 2009, first as chief financial officer and latterly as UK CEO.
"Our recent reorganisation to create four global business lines gave Martin the opportunity to consider his next move, and we respect his decision to move on. We all wish him well for the future."
Reviewing the figures, Fiona Cincotta, senior market analyst at City Index, said: “Profits have come in just ahead of expectations, though the market could be a little concerned about the weaker UK performance .
“Margins in what remains the company's biggest market have contracted by a full two percentage points, while the division's head has stood down, too.
“There's no real cause for a alarm here though. The fall in margins can partly be attributed to increased spending on efficiency improvements, while customer retention remains strong at 79% and total UK customer numbers are still growing.
“All up, Homeserve remains a popular go-to online source for a range of emergency home improvement services. And it's continuing to set a leading example for British company's wishing to expand abroad.
"Despite a few hiccups in Germany and Belgium, the US, French and Spanish operations keep going from strength to strength, providing plenty of headroom for more growth.”