Homeserve warns of falling profit

by Gill Montia

Story link: Homeserve warns of falling profit

Homeserve has warned that operating profit for 2008 could be down by between £2 million and £3 million.

The company, which specialises in emergency cover and repairs for homeowners, says it has 6.66 million policies in force but is mindful that the recession could lead to cancellations, despite the value of insurance cover for domestic essentials such as heating systems, when finances are stretched.

The group has announced plans to save £5 million by March of next year, in a move that could result in some job losses among its 5,500 strong workforce.

Chief executive, Richard Harpin, points out that recent trading figures show membership is holding up well, despite a significant deterioration in the broader economic climate.

However, he has also revealed that retention rates are falling and that he expects a continued poor retail environment to impact on earnings.

Costs associated with the company’s failed bid for Domestic & General in August are also partly responsible for a predicted fall of 3% in pre-tax profit during the current financial year.