Competition to hit price comparison site’s profits

Aug 28 2008 by Alex Turner, Liverpool Daily Post

THE cost of maintaining moneysupermarket.com’s market-leading position is expected to hit the price comparison website’s second-half profits.

The Deeside-based firm yesterday announced its first-half earnings, to June 30, rose 14% to £30m as turnover increased 27% to £99.4m.

However it expects trickier conditions in the coming months.

The web comparison firm has been hit as financial service providers respond to the credit crunch by cutting back the number of loans, mortgages and credit cards on offer.

It suffered a blow last month when it emerged one of Britain’s biggest loans providers, First Plus, was stopping new business, potentially knocking full-year revenues by £7m and earnings by up to £5m.

Founder and chief executive Simon Nixon said: “Our second-half revenue growth will be solid, albeit slower than the first half. Overall, in the longer term, price comparison remains a large and growing sector and we will continue to invest to enhance our leading and diversified market position.”

The promised investment includes increased spending on advertising as it seeks to maintain its market position against more than 100 rival price comparison websites.

“From a marketing point of view, competition has intensified and this will have an impact on margins,” said Mr Nixon, who still has a 54% stake in the business.

“We will take a view each month on marketing spend. We feel at the moment it is a bit of a land grab.”

Moneysupermarket.com makes its money when visitors to its website click through to buy a service from one of the listed financial service businesses.

Visitors to the group’s websites, which includes travelsupermarket.com, increased by 39% to 62m and transaction levels rose 37% to 39.6m.

The firm’s websites allow consumers to compare prices for insurance, mortgages, loans, credit cards and package holidays.

It plans to launch a comparison service based on shopping in the next few weeks.

It closed 3% up yesterday at 79p.

alex.turner