PowerGen faces increased competition

PowerGen says growth in its UK retail business has slowed amid tougher competition for household accounts.

The group, which agreed a takeover deal from German company E.ON in April, added 65,000 customers in the three months to September 30.

While this takes PowerGen's customer base to more than 3.4 million, the growth was 40% below the level recorded in the previous quarter.

PowerGen's chief executive Nick Baldwin says the group has seen marked price competition in the sector but adds he is pleased with the performance.

There are now 29 companies, including npower and Centrica, competing for the right to supply UK homes with gas and electricity.

He says the group's main aim is to encourage existing customers to take up other services such as gas or telecoms. It now has 250,000 telecom accounts.

He adds: "While the market is clearly tough, the profits we have got from the retail business continue to be strong."

The update came as PowerGen reported third quarter bottom-line pre-tax profits of £78m, up from £71m last year.

Despite the rise, the group's profits for the first nine months still dipped to £375m from £398m before one-off costs.

Mr Baldwin says E.ON's takeover, worth nearly £10bn, is on track to be completed by April next year. Shareholders will receive a third quarter dividend of 9.2p per share.