Gentrack shares dropped to a three-year low after UK electricity retailer E.ON suspended its planned deployment of the Kiwi firm's billing platform, adding another headwind to an already tough market.

The shares plunged 22.8 per cent to $3.04 when trading opened, the lowest since February 2017.

The NZX-listed utilities software developer said it will update its earnings outlook for the year ending Sept. 30 over the next week, once it has worked out how much worse the market conditions have been relative to expectations and what the E.ON decision means for its business.

Gentrack reported a net loss of $3.3 million in the September 2019 year due to impairment charges on an acquisition that didn't perform as expected, and the underlying result wasn't much better as earnings before interest, tax, depreciation and amortisation dropped 19.8 per cent to $24.8m.


The company downgraded the 2019 guidance three times before reporting in late November. Gentrack's outlook for 2020 was for a broadly flat result due to uncertainty in the British market.

The software firm today said it was still dealing with tough market conditions in key utilities markets that hit its sales pipeline more than expected.

"In addition, E.ON, a significant UK utility customer, has indicated that it intends to suspend deployment of its new Gentrack billing platform to focus resources on the integration of the recently acquired Npower business," it said in a statement.

"Gentrack is currently assessing the financial implications of both the broader adverse market conditions and E.ON's decision."

The company provides software to more than 220 utilities and airports in 30 countries. It gets just over half its revenue in the UK.

Stricter audit rules and a requirement for suppliers to pass on renewable energy subsidies to customers triggered a string of failures in the UK market. In December, Npower owner E.ON flagged plans to cut up to 4,500 jobs of its 5,700 staff in a restructuring plan to hand over millions of customers to E.ON UK, shrinking the big six to the big five.

Gentrack was to have had E.ON and Npower signing up to its billing software. Now it just has EDF of the major suppliers, along with 40 per cent of independent UK suppliers' meter points.

It has 6.3 million UK energy meters billed by its software, up 1.1 million from a year earlier, and giving it 12 per cent of the total addressable market.