British Gas warns of decline in year's profits

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The Independent Online
British Gas warned yesterday that first-quarter profits this year would be flat despite cold weather, and the full-year results were likely to see a decline, writes Mary Fagan.

The shares fell 15p to 280p after Richard Giordano, chairman, told the annual meeting in Birmingham that profits were being squeezed by regulatory price controls and the loss of market share to new suppliers. These include electricity companies and North Sea producers.

Changes in the domestic and industrial gas markets being considered by the Government and Ofgas, the regulator, would have a material effect on profitability, Mr Giordano said. He could not comment on the prospects for dividends.

British Gas is awaiting a decision on how the monopoly over domestic customers will be broken down. Ofgas is also looking at how much British Gas will be able to charge other gas supply companies to use its pipelines.

Mr Giordano is concerned that British Gas will be forced to provide higher standards than its rivals and that other suppliers may cream off the most lucrative customers.

Last year British Gas made a pre- tax loss of pounds 365m - the first since privatisation - after exceptional items of more than pounds 1.6bn.

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