- Shares may have run ahead of fundamentals
- Unchanged dividend a negative surprise
- Energy switching service still on hold
There was a sense of ‘travel and arrive’ with today’s release of full-year numbers from Moneysupermarket.com (MONY), given the strong run in the shares since the start of the year.
Lack of news on the energy switching front and the decision to hold the dividend at last year’s level were met with a 7% sell-off first thing, although the shares steadied to trade down 3% at 228p by mid-morning.
CUSTOMER DEMAND INCREASING
The money-saving website operator reported a healthy 22% increase in revenue for the year to December, driven by a strong performance in its money and travel channels.
Income from the money channel, which compares prices on banking products like mortgages, loans, deposits and credit cards, was up 37% to £103 million as customers shopped around for the best deals after repeated increases in UK interest rates.
Meanwhile, income from the travel channel jumped 265% to £14.9 million as people rushed to book holidays, hotels, flights and car hire, although revenue was still only half the level prior to the pandemic.
The core insurance business, which includes home, car, travel, pet and life cover, reported an 8% rise in revenue to £172 million with the firm noting a return to growth in motor policies and big jump in demand for travel products.
The home services division - which previously included energy switching - posted a 42% decline in revenue to £39.8 million, although demand for phone and broadband deals was strong.
The Cashback channel posted revenue of £57.6 million, supported by strong offers from Quidco which were especially popular around Black Friday.
DIVIDEND DISAPPOINTMENT
Given the robust increase in the top line, which translated into a 33% increase in pre-tax profit to £69.3 million and a 30% increase in EPS (earnings per share) to 12.7p, investors appeared miffed at the firm’s decision to leave the total dividend unchanged at 11.7p.
However, it is worth pointing out 2021’s dividend wasn’t fully covered and the firm’s priority last year was to pay down debt while maintaining the same level of payout.
While there is no sign yet of the company restarting its energy switching service, as and when it does there is scope to resume dividend growth, and if the business finds itself with significant surplus capital and ‘no material short-term organic or acquisitive growth opportunities available’, the board says it will consider making a ‘special distribution’.
