Last week's decision by Manweb, the Manchester-based regional electricity company, to abandon the fiercely competitive electrical retail market is part of a trend that is set to continue. Four of the electricity companies have thrown in the towel so far in a market so brutal that Thorn EMI decided to pull the plug on Rumbelows and Comet, the Kingfisher-owned chain slumped into loss. More of the regional electricity companies are expected to give up the fight this year. London Electricity was the first to raise the white flag when it limped away from the market 18 months ago with its balance sheet wounded by a £20m write-off. In January, East Midlands and Yorkshire Electricity decided to walk away from their loss-makingHomepower joint venture at a cost of £60m The accompanying table shows that there is scant reason for many of the other RECs to stay in a market where profits prove elusive. The question is, who will bite the bullet next? Most analysts suggest that Powerhouse, the three-way joint venture between Southern, Midlands and Eastern Electricity will be the next to go. The retail operation made a loss of £7.4m last year on sales of £259m. However, the company recently appointed anew chief executive, Glyn Moser, the former Radio Rentals managing director, indicating the three partners may wish to continue the war of attrition. The market's minnows such as Scottish Hydro, Northern Electric and Seeboard could also decide that the market is more trouble than it is worth. Northern Ireland Electricity, with sales of just £26.3m last year, is another candidate. Last September it warned of 400 job losses unless staff accepted a 15 per cent pay cut. Of all the RECs still in the retail market only two are making a decent return for shareholders. Scottish Power, has signalled its growth intention by buying Manweb's five out-of-town superstores for £3m last week. It also bought the Clydesdale operation from the receiver last year and now has 162 stores. Norweb is also expanding aggressively.
RECS ON THE HIGH STREET Regional Electricity Company Profits and losses Manweb £0.5m loss in year to March `95. Sold to Scottish Power for £3m. £16m provision.
Scottish Power £7.4m profit on £114m sales. Expanding.
Homepower (East Mids, Yorkshire) £6.8m loss in 6 months to Sept'94. Sold to Powerstore. £60m provision.
London Electricity Sold to Powerstore in `93 after substantial losses and £20m write- off.
Powerhouse Lost £7.4m last yr. Tipped as sale candidate (Southern, Eastern, Midlands)
Sweb Lost £0.5m on £35.5m sales in 6 months to Sept'94
Seeboard £1.8m profit on £54.3m sales `93-94
Norweb £7.1m profit on £187m sales `93-94. Expanding superstores aggressively.
Northern Electric £2.7m profit on £43.4m sales `93-94
Scottish Hydro Sales £28.8m. Profits "satisfactory"
Northern Ireland £0.5m profit on £26.3m sales `93-94.