Home repair and insurance firm’s shares drop 10% on warnings of lower customer numbers
Homeserve’s shares plummeted 10% today after warning of lower customer numbers and the announcement of 200 job cuts.
Homeserve said customer numbers could fall 8% in 2012, more than the previous 5% estimate. Renewal revenues in 2013 would be £10m lower. Adjusted pre-tax profit ending 31 March, 2012 would be the expected £127m.
The firm has been under fire since Deloitte released a report last year raising concerns of mis-selling.
Homeserve suspended UK telesales in October to review marketing techniques and retrain sales staff. It also reopened thousands of customer complaints.
According to Reuters, Charles Stanley Securities analyst Andy Smith warned more pain is to come: “With both the UK in-bound and out-bound sales staff yet to be fully retrained, our expectations for HomeServe continue to be low.
“The problem is not so much in declining profitability in FY12, but in FY13, as it is in the second year in which new policies become profitable.”