Iceland warns of costs as energy bill set to double by 2023

Iceland has warned the global impact of energy prices is likely to have an impact on its performance next year.

The news comes as it is set to be hit with a surge in energy costs from the running of its freezers, according to The Financial Times.

Iceland’s energy bill for the year ended March 2022 was £70m, but Alise Ilzana-Raghuvanshi, analyst at Fitch Ratings, has suggested this could “more than double in 2023”.

Up to a third of the grocer’s sales volume comes from frozen foods, exceeding its rival retailers, which requires more energy to keep cold.

The grocer has almost 1,000 UK stores, and has cited substantial sales increases in the midst of the cost of living crisis. However, the supermarket said in its latest annual report that the “considerable uncertainty and volatility in global energy prices” meant it “will be unable to avoid a temporary reduction in our profits during the current year” unless prices stabilised.

Fitch has said it expects Iceland’s profits this year to drop below £100m, compared with £126m last year, as it will not be fully able to pass on the increasing energy costs.