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While other energy firms go bust, this minnow just turned a profit: ‘I sleep well at night’

·2-min read
Yu Energy CEO Bobby Kalar (Yu Energy/David Baird)
Yu Energy CEO Bobby Kalar (Yu Energy/David Baird)

Small energy firms are going bust at a rate of knots due to soaring natural gas prices that are making electricity prohibitively expensive.

But Yu Group, an AIM-listed minnow worth just £40 million, is bucking the trend. The company today said it turned a profit of £920,000 over the last six months as revenue soared 44% to £65 million.

“I sleep well at night,” founder and CEO Bobby Kalar told the Standard today. “I’ve got a solid hedging book up to 2023.”

Hedging - the process of buying electricity in advanced at fixed prices - has helped Yu avoid the pain of spiking electricity prices. But a big reason is the fact that Yu operates in the commercial energy and utility sector, meaning it is exempt from the consumer price cap that has clobbered many companies. Companies that serve households are prohibited from raising prices high enough to keep them in line with current wholesale prices.

“The price cap is really crippling suppliers,” Kalar said.

But the price cap isn’t the only issue. Many smaller companies aren’t hedging, Kalar said.

“They are selling a product and they are not going out to buy it. In a falling market that’s a great strategy but you don’t want to do that in the commodity market.”

Experts warn as many as 50 supplier could go under this year, with customers transferred to rival suppliers. Kalar said Nottingham-based Yu was sniffing around acquisitions.

“There is increased appetite in terms of the opportunity,” he said. “There are B2B suppliers who are running out of cash, there are B2B suppliers who are not hedged.”

Yu has looked at some firms that have gone bust recently but most had both consumer and business accounts and Kalar has no appetite to get into the price cap market.

He warns that soaring energy prices could continue for “a couple of years” as rich Asian and Latin American buyers snap up liquified gas shipments.

“I’m very cautious,” he said. “If we’ve got a cold winter this year, we’ve got a problem.”

Shares in Yu rose 0.8% today.

Read More

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UK energy crisis: Will my gas bills rise and what happens if my supplier goes bust?

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