Whilst crippling wholesale energy prices may have dampened celebrations this year following an £8m loss during November and December 2005, Telecom plus (The Utility Warehouse) is again back on track. With a 'Good Value' recommendation in the Investors Chronicle of June 9th, profits and dividends are expected to rebound strongly.
Whilst gas prices were previously unhedged, an agreement with npower earlier this year, means that Telecom plus is now far less exposed to the price surges of the wholesale gas market. With this probelm solved, Telecom plus can again focus on it's core business of selling utilities to a growing customer base.
Whilst operating margins may be lower than previously envisaged, the npower agreement has already had a positive impact, with the Telecom plus energy business returning to profitability during the last quarter.
Telecom plus Management said that it is confident of resumed growth of dividend and full return to profitability in the new year, also commenting that little effect has resulted from Carphone Warehouse's recent agressive broadband marketing.
Broker KBC Peel Hunt is forecasting a dividend in 2006-07 of 2.5p, rising to 5.5p in 2007-08. Telecom plus shares look good value.
Labels: press-articles
posted by Jeremy Tromans at 6/16/2006 11:13:00 AM
