Search form

Last updated: 11 min 44 sec ago

You are here

Business & Economy

British Gas owner Centrica loses 823,000 customers

LONDON: British Gas owner Centrica lost a fifth of its share market value on Thursday after the company said in a trading statement it had lost thousands of customers and cut its full-year earnings forecast.
Britain’s big energy suppliers are under pressure from smaller rivals offering cheaper deals and the group reported a loss of 823,000 supply customers in the four months to Oct. 31.
The company also said its full-year adjusted earnings per share this year were expected to be below market forecasts at around 12.5 pence, “largely reflecting lower than expected adjusted operating profit in North America Business and UK Business.”
“Trading conditions continue to be highly competitive and performance delivery since mid-year within the Centrica Business energy supply businesses has been disappointing,” Chief Executive Iain Conn said.
Shares in the group plunged 22 percent in early trading and stock was down 16 percent at 8:41 a.m. GMT, after it said its 2017 adjusted earnings per share would come in around 12.5 pence, compared with an expectation of 14.9 pence.
“The question now is whether this weakness will persist into 2018, and the longer term potential impact on the dividend,” analysts at Morgan Stanley said, noting that the dividend cover was tightening.
Centrica said it now expected an adjusted operating cashflow of more than £2 billion ($2.66 billion), after a result of £2.69 billion last year.
Centrica’s British Gas business had around 14 million residential energy supply accounts in 2016.
The sector has come under pressure since Prime Minister Theresa May said in October she would impose controls to tackle what she called “rip-off energy prices.”
Home power bills have doubled in Britain over the past decade to an average of about £1,200 ($1,600) a year.
On Monday Centrica had said it would stop offering its standard variable tariff (SVT) — the payment targeted by the government cap — to new customers from March 31.
It also called on the government to phase out SVT deals altogether and prohibit so-called evergreen tariffs without an end-date, arguing that such deals reduce customer engagement.
Britain’s other top energy suppliers are Iberdrola’s Scottish Power, E.ON, EDF Energy, SSE and Innogy.

MORE FROM Business & Economy