Moneysupermarket shares falls on COVID-19 fears
Price comparison website Moneysupermarket.com (MONY.L) posted a decline in third-quarter revenue on Thursday as COVID-19 knocked customer sentiment, which had a direct impact on the business’s various sales channels.
In the three months to 30 September, group revenue fell 16% to £85.1m ($113.2m), with revenue in the nine months to the end of September down 11% to £268.4m, according to the company’s Q3 trading statement.
Moneysupermarket’s money business saw revenue fall 40% in the third quarter to £12.5m, while the insurance segment declined by 8% to £45.7m. Home services revenue was also 13% lower in Q3 at £15.5m, with other revenue being reported as lower by 9% at £11.5m.
Shares were down 5.7% at around 11:15am in London.
With respect to its insurance business, the company said the motor segment “benefitted from strong but slowing market growth,” but they were “not seeing similar growth in other core insurance channels.”
“Our markets continue to be impacted by COVID-19, which is affecting our current performance,” said CEO Peter Duffy. “However, the Group benefits from strong brands and high levels of cash conversion, so we are well positioned to weather this period of economic uncertainty and deliver future growth.”
Analysts agree that customer uncertainty amid the coronavirus pandemic has translated into a weaker outlook for the comparison site.
“People’s motivation for switching is to make significant savings and if they are not able to do so for a variety of reasons then this will inevitably have a negative impact on demand for Moneysupermarket’s services,” said Russ Mould, investment director at AJ Bell.
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“This was particularly evident in the energy space where an increase in wholesale prices and a reduction in the energy price cap meant there was less to be gained for consumers by switching provider. This is the part of today’s announcement which probably took the market by surprise and has driven earnings downgrades.”
He added that despite customer appetite for lending products being high at times of economic stress, a lack of availability and the tighter criteria applied by lenders means revenue in this area is falling sharply.
“The travel side is inevitably something of a write off, while the home and life insurance bits of the group are also struggling,” he said. “Even motor, which is a relatively bright spot, is starting to sputter as growth slows.”
Mould said investing in technology, including areas related to automated switching, and a strong balance sheet could help the business come out of the pandemic in a stronger position.
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