* Shares down 9.33 pct to 202 pence
* Says UK customer numbers will fall until 2014
* Hopes for growth abroad to offset UK decline (Adds details on profit warning, market reaction)
By Christine Murray
LONDON, March 22 (Reuters) - HomeServe warned on profits for the next two years on Friday saying changes in marketing policies had failed to halt falling customer numbers in Britain for its household repairs and insurance services.
Shares in the firm, which is being investigated by regulators over policy mis-selling concerns, were down by over 10 percent at 200 pence by 1056 GMT on Friday.
The firm said that it expects UK customer numbers to hit a low of 1.9 million in the year to March 2014, below analyst forecasts and down nearly a third on the 2.7 million it had last year and 2.25 million in the year just ending.
Andy Brown, an analyst from Panmure Gordon, said that the Financial Standards Authority investigation launched in May was making the firm more cautious in its marketing, meaning that it was not winning enough new business to offset customers not renewing existing policies.
“Now what we’re seeing is the group having to operate within much stricter guidelines,” he said, adding that the wide range of possible outcomes from the investigation makes the firm very tricky to value.
HomeServe, which sells cover for houshold emergencies such as boiler breakdowns and burst water pipes, said it expects its UK business to contribute 35 million pounds ($53 million) less than expected in the next financial year ending March 2014.
It hopes to partially offset the fall in business by cutting jobs to save it 10 million pounds.
It announced 300 job losses today on top of 300 announced previously. Last year the company said it employed over 2,700 people in the UK, out of a group total of around 4,000.
The firm first suspended British telesales in October 2011 after an internal review raised concerns over how its policies were being marketed and sold.
Chief Executive Richard Harpin, who set up the firm in 1993, said on Friday that HomeServe had ended most of the cold-calling it had conducted previously and was focused on selling new policies via partnerships with utility firms who offer the services under their own brand.
However, he said that direct mailing by post was still the most effective way of winning new customers, who are mostly retired.
Since the market was first informed of problems around marketing the shares have more than halved in value, falling from 485 pence at the end of October 2011.
Panmure’s Brown, who has a “sell” rating on the stock, said that opinion was still quite divided on the stock and that it was unlikely that big shareholders would sell as a result of today’s news.
HomeServe is trying to offset the shrinkage of its British business by taking its business model abroad, and customer numbers in the U.S. business are expected to have risen by 20 percent in the last year.
The firm said that it is aiming for a roughly even split for profits between the British and international business in the medium term.
Analysts are predicting a 17 percent fall in pre-tax profits to 105 million pounds in the year just ending, which the company is due to report on in May, according to Thomson Reuters I/B/E/S Estimates.
HomeServe said on Friday that its profit for the past year would be in line with expectations, excluding exceptional items of a 4 million-pound charge to pay for announced layoffs and a 15 million-pound writedown on an acquisition in France.
It said that it expects the business to return to modest growth in the year ending March 2015. ($1=0.6588 British pounds) (Editing by Greg Mahlich)