July 11, 2017 / 6:33 AM / a year ago

Gocompare.com sees boost from thrifty UK shoppers

(Reuters) - Price comparison website operator Gocompare.Com Group Plc said it was well positioned for the rest of 2017 and forecast a 22 percent jump in first-half adjusted operating profit, boosted by improving marketing margins.

Shares in Gocompare, which have risen over 40 percent since it demerged with insurer esure and listed in November, were up 5 percent at 109.6 pence at 0845 GMT (9.45 a.m. BST) on the London Stock Exchange.

Economic weakness coupled with rising prices have made price comparison websites operated by Gocompare and Moneysupermarket.com increasingly popular as consumers look to tighten their purse strings.

British consumers have suffered the longest decline in their spending power since the 1970s, official data published last month showed, amid slowing wage growth and accelerating inflation, caused by the pound’s slide since the UK’s vote to exit the European Union.

One out of five Britons switch household expenditure items or financial services products regularly, while three out of five switch providers at times, Gocompare Chief Executive Officer Matthew Crummack told Reuters.

He added that legal changes and a rise in the insurance premium tax could drive up prices and that along with a “pressured” macroeconomic environment could cause consumers to shop around more.

“I think it’s very early yet for us to say that there is any concrete macro-trend appearing, but certainly our expectation over time is a combination of factors would generally drive a change in consumer behaviour,” Crummack said.

Gocompare.com allows customers to compare rates of insurance policies, financial products and energy tariffs.

The company’s marketing margin is estimated to have risen to 40 percent from 34.5 percent last year, said Peel Hunt analyst Malcolm Morgan.

He raised his full-year pretax profit estimate for the company by 8 percent to about 32.6 million pounds and said new campaigns are expected to accelerate Gocompare’s second-half revenue growth by more than 12 percent.

Gocompare has forecast high single-digit revenue growth in percentage terms for the full year.

Crummack said the group had spent a “modest portion” of Gocompare’s cash generation to buy a minority stake in robo-adviser Mortgage Gym.

Gocompare has also signed a marketing deal with Haymarket Media, the owner of Autocar magazine, to provide insurance quotes and information to readers, in turn driving traffic, Crummack said.

“(The deals are) important steps on the group’s journey to diversify its revenue base away from insurance,” Hargreaves Lansdown equity analyst Nicholas Hyett said.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amrutha Gayathri

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