(Alliance News) - Yu Group PLC on Wednesday raised its profit forecast after reporting first-half sales growth, saying its hedging policies mean it its unaffected by volatility in energy markets.
The Nottingham-based utility supplies gas, electricity and water to businesses. Revenue grew 43% year-on-year in the first half of 2021 to GBP65.8 million from GBP45.9 million. Pretax profit came in at GBP920,000, swung from a loss of GBP1.7 million.
Shares were up 2.2% to 255.55 pence in London on Wednesday morning.
The AIM-listed company said the sales increase was driven by its organic growth strategy.
Commenting on the surge in oil and gas prices this year, Yu said: "We note that a number of domestic energy suppliers have failed, largely a result of limited hedging of their portfolio (due to constraints on credit limits or cash) and the consequence of the domestic-focused price cap.
"Whilst these issues are impacting the domestic market, the board are confident in the group's hedging strategy and positioning."
The company did warn, however, that it will have to pay extra costs under UK energy regulations, in which failures of suppliers are shared across the industry.
In current trading, Yu said it enjoyed strong bookings in July and August as more business customers shop around for better deals.
As a result, adjusted earnings before interest, tax, depreciation and amortisation in 2021 will be ahead of market expectations. Revenue is seen in line with expectations.
"I am delighted to report a solid H1 performance with positive momentum continuing into H2. I'm especially pleased to be delivering profitable growth as promised," Chief Executive Bobby Kalar said.
"The recent gas price and industry turbulence have had no material impact on the group to date due to our robust hedging policy. We continue to explore acquisition opportunities that sit in our sweet spot and will further accelerate our growth strategy."
By Ivan Edwards; ivanedwards@alliancenews.com
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Yu Energy (YU.)