A cut-throat market slashed into profit as oil major Shell forayed into the energy supply market last year, the company has revealed.
First Utility, which in March was renamed as Shell Energy, turned its £29.2 million operating profit in 2017 into a £5.9 million loss a year later, newly released accounts from Companies House show.
Chief executive Colin Crooks said “challenging market conditions” and investment in the business had cut into its bottom line after Shell bought it in December 2017.
“Our focus is on building a business for the long term. We are working hard to meet the changing needs of our customers against a backdrop of a changing energy system,” he said.
“We are determined to build a strong and profitable power business for the coming decades.”
The supplier, which has around 780,000 customers, rebranded to Shell Energy earlier this year after the London-listed oil firm took over one of the country’s more successful challengers.
It was the first time Shell dipped its toes into the energy supply market as it looks to diversify its business.
The rebranded supplier switched all its customers to renewable energy and is installing smart thermostats and electric car charging points.
Shell Energy’s £29 million pre-tax profit fell to a nearly £21 million loss as it took a £15 million charge after it changed the way it reports its German subsidiary.
Turnover fell by just under 1% to £850 million.
It was not the only company which faced challenges over the year, as several suppliers struggled in a tough market.
Ten businesses have closed their doors in the past 12 months, including Economy Energy, Spark Energy and Extra Energy.
All were challenger suppliers trying to break the monopoly of the Big Six.
But even the bigger suppliers felt the pinch, with SSE’s adjusted profit before tax dropping 38% in the 2018/19 financial year.