Moneysupermarket loan arm toils in crunch

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Moneysupermarket.com, the price comparison website, made almost no commission from loans or mortgage customers in the fourth quarter of 2008, according to analysts, as the group published its full-year results yesterday stating that earnings were down 9 per cent.

The company was able to piggyback on the boom of easily available credit until about a year ago, when cheap loans and mortgages started to dry up with the onset of the financial crisis. As lenders have cut back on enticing deals, and the unemployment rate has ticked up, Moneysupermarket.com's performance in what it describes as its Money division has started to suffer. "We estimate fourth-quarter revenue came in at £9.5m, 45 per cent less than the third quarter and 52 per cent behind fourth-quarter 2007 numbers. We believe that the group generated almost no loans and mortgage commissions in fourth quarter resulting in this drop," David McCann, an analyst at Numis Securities, said.

The group does not publish quarterly results for each of its business channels, and a spokesperson refused to confirm Numis's claims about the Money business. After contributing 46 per cent to overall group revenues in 2007, turnover from Money totalled just 38 per cent in 2008.

The company's new chief executive, Peter Plumb, says that in the "current climate" he "cannot think of another business that is better positioned for [the public's] belt tightening." It is also true that the number of people visiting the website is up, but Mr Plumb conceded that "because of the recession, we are currently trading at levels well below last year.... The immediate task is to get leaner and more efficient, continue to generate cash and ensure the business is well positioned for when the recovery eventually comes". Overall earnings before interest, tax, depreciation and amortisation (Ebitda), which is the company's preferred way of rep-orting, was down 9 per cent in 2008; revenue was up 10 per cent to £178.8m.

The group's insurance division showed a relatively strong performance in the fourth quarter, with revenues up by about 10 per cent against the third quarter, according to Numis. Mr Plumb argued that the insurance arm in particular remains buoyant and pointed to fact that 8.6 million people visited the car insurance section of the website last year, each saving, the group claims, an average of £155.

The insurance business contributed 44 per cent of group revenues in 2008, up from 35 per cent the year before, and is now the biggest part of the company.

The group was the worst performer in the FTSE 250 yesterday as its shares closed down 6.2 per cent at 45.25p, on concerns about the condition and future of the Money business. The fall adds to a drop of 64 per cent in the last year.

Despite the Money business, Mr McCann reckons that the group will remain "relatively resilient in the short term", being the market leader in the industry, and that overall, the company was profitable in the fourth quarter.