Home improvement firm Entu has revealed the extent of which its solar arm was struggling prior to closing down the division last September, claiming part of its sales team was poached at the start of 2015.
In a trading update issued this morning, the company revealed that discontinued operations – including both the solar business and its kitchen interiors unit – reported a £3.8 million loss for the year ended 31 October 2015, representing a substantial fall on the £1.1 million profit the two divisions made in the previous year.
In September Entu blamed an “increasingly difficult” business environment for solar in the UK for its decision to shutter the solar business. It revealed it expected to make a £2 million loss from the division having previously forecast a profit of £1.6 million, and placed the blame solely on the implications of policy decisions.
It said the proposed cuts to the feed-in tariff and a possible increase in VAT had left it facing “dramatically” deteriorated prospects, but this morning’s update revealed that the division had experienced “significant disruption” before the cuts were announced.
It started at the beginning of 2015 when part of Entu’s solar sales team was poached by a competitor. “A great deal of management time and resources were devoted to recruitment, training and managing this business in order to ensure that the customer experience was affected as little as possible by this disruption,” the company said this morning.
Entu said that this disruption was shortly followed by the government’s announcement of a proposed to change to the feed-in tariff in August, a move which it said “rendered the solar panel product dramatically less attractive to consumers”.
“Faced with an obvious collapse of customer demand, the group took a prompt decision to cease selling its solar panel products to the consumer. Since that point, it has wound down its solar installation activities in order to meet its existing obligations,” it said.
But rather than make sweeping job losses, Entu confirmed it had retrained “many” of the solar division’s personnel to operate in other parts of the group’s activities in order to “minimise job losses and redundancy costs”.
Entu said that the problems with the solar division represented a “substantial issue” for the business and, after consideration, ultimately concluded that the group’s resources “would be better allocated elsewhere”.
“The prompt decision to close the solar division was difficult but necessary, but it allows the group to avoid the risk of future trading losses in this sector and focus group management and resources on alternative and more attractive areas of growth,” it added.
As a result, Entu has disclosed that it expects results for the forthcoming year to be “marginally below” this year’s.
“The closure of the solar business and the required investment in infrastructure has undoubtedly affected the profit potential of the group over the next couple of years. Accordingly, the group is now taking a more prudent view on the outcome for the year than it had previously,” Ian Blackhurst, chief executive at Entu, said.