Centrica profits fall as warm spell hits gas use

Centrica issued a profits warning yesterday and pledged to step up its cost-cutting campaign after an unusually warm autumn allowed cost-conscious consumers to reduce their energy consumption.

The company said its 2011 earnings "may be marginally lower than current market expectations" because residential gas consumption had plummeted by 17 per cent in the first 10 months and electricity use dropped by 3 per cent.

Centrica, which on Wednesday announced 850 job losses at its British Gas supply unit, said there would be further cuts across the business, starting with its UK power generation division. It declined to be more specific, although its ageing gas-fired plants at Kings Lynn, Norfolk, and Barry, south Wales, which employ nearly 300 people between them, are expected to be among the casualties. Centrica blamed the mild weather and the need for businesses and consumers to save money in a difficult economy.

It conceded that it had lost about 200,000 customers since raising its gas and electricity bills by 18 per cent and 16 per cent in August, although it remains Britain's biggest utility supplier, with 15.9 million customers. The price rises were in response a 30 per cent jump in wholesale gas costs since the start of the year, as the Fuku-shima crisis in Japan sparked an exodus from nuclear power. Centrica defended its price rises, saying: "We protected customers from the effect of higher costs for as long as possible."

It pointed out that rising wholesale prices meant its British Gas residential business had been making a loss since April. It has returned to profitability since bills went up in August. But Centrica acknowledged that its production arm benefited when wholesale prices were rising. The boost from strong wholesale prices means that it "continues to expect growth in full-year earnings, despite significantly lower margins in our downstream residential business."

Angelos Anastasiou, an analyst at Investec, said it was disingenuous to issue such a tiny profits warning, as the big six utility companies face criticism from customers and politicians over rising bills. "It looks slightly politic to say, 'hang on, we may not be doing that well', when everybody is sticking the knife in," he added.

"The consensus forecast for the year was for earnings per share to come in at 26p, compared to 25.2p last year. Now they're saying it might not hit the consensus estimate, but it will be above last year, so it's probably going to be around 25.6p or 25.7p."

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before