The parent company of British Gas has seen a dramatic fall in profits after being hit by falling oil prices and warmer weather.
Centrica, which as well as owning British Gas also counts Direct Energy and Bord Gais Energy among its assets, saw profits slide by 35 per cent for the financial year to 31 December.
British Gas’s residential business fell by 23 per cent to £439m, as British consumers spent roughly £100m less on bills than the previous year as a result of the warmer while company’s annual profits overall slipped to £1.75 billion. Although analysts had braced themselves for a painful drop, the severity of the results – around six per cent more than forecast – took many by surprise.
The news sent shares in Centrica tumbling with more than eight per cent in morning trade.
The former BP executive Iain Conn, who has headed Centrica for only a month, today said the company would cut investments and costs, adding that they had had taken the “painful” decision to cut dividend payments to shareholders.
The full-year dividend was down from 17 pence to 13.5 pence per share, with earnings following suit down from 19.2 pence per share from 26.6 pence per share.
The group also disclosed it was planning to close power stations at Killingholme and Brigg, Lincolnshire, but has been unable to sell the plants – which have been in use for the past 20 years – after receiving bids that were “significantly lower” than its valuation.
Power plants in Humber, in north Lincolnshire, and Langague, in Devon, will be retained. Centrica had attempted to sell off Langague as well, but as with the Lincolnshire plants, did not receive bids matching their valuations.
It comes amid an embarrassing accusation from consumer watchdog that British Gas – among other ‘Big Six’ firms – have been overcharging loyal customers by hundreds of pounds in some cases.
Additional reporting by Press AssociationReuse content