Ovo’s profits increased 11 times in the wake of the energy crisis

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UK energy supplier Ovo Group boosted profits 11 times last year after the regulator stepped in to allow companies to recoup rising costs following Russia’s invasion of Ukraine.

Ovo Group, which owns UK supplier Ovo Energy as well as energy software company Kaluza, reported adjusted earnings (ebitda) of £225m in the year to the end of December 2023 on revenue of £8.7bn pounds sterling.

This was growing from £20m to revenues of £6.7bn in 2022, according to newly published accounts.

The Bristol-based company said the improvement was mainly due to UK energy regulator Ofgem allowing companies to recover from customers in 2023 the cost of buying power in 2022 and at the end of 2021, when wholesale prices rose on concerns about long-term gas shortages. even after the Russian invasion.

Several other large suppliers reported a rise in profits in 2023 due to this mechanism, including British Gas, which posted adjusted operating profits of £969m for the first half of 2023, up from £98m sterling in the same period of the previous year.

Ovo is controlled by its founder Stephen Fitzpatrick, who set up the company in 2009 as a challenger to the “Big Six” energy suppliers such as British Gas. Its other shareholders are Mayfair Equity Partners and Mitsubishi Corporation.

Ovo Energy became the UK’s third largest supplier in 2020 after buying the retail supply division of SSE. But it has since been overtaken in market share by rival Octopus Energy.

It is now the fourth largest provider in the UK, with around 4 million customers. Earlier this year, it appointed former Sainsbury’s chief executive Justin King as non-executive chairman.

The adjusted Ebitda figure of £225m strips out the amount of power Ovo buys up front to cover its supply commitments. Its unadjusted results show a swing from a loss of £1.3bn in 2022 to a profit of £817m in 2023.

Its results are published at a sensitive time for the sector. The UK price cap on energy bills has fallen by more than 60% since the start of 2023 at the height of the energy crisis as wholesale gas prices fell. But the cap is expected to rise by 10% in October as a result of a recovery in wholesale gas prices.

Household energy companies, including Ovo, were called to a meeting with the government last week to discuss what more they could do to prevent customers going into debt on their energy bills.

Commenting on the results, Ovo chief executive David Buttress said it wanted to “invest in technology and services that help customers modernize their homes and reduce their reliance on fossil fuels, while keeping bills low”.

King said: “Whether they want to charge their car on the street or save money on heating, we want to make things easier by helping people spend less.”