Centrica shares tumble on second profit warning in six months
Centrica admitted 180,000 households have quit its domestic arm British Gas but made no offer to cut prices
Shares in Centrica fell 3 per cent in early trading after the energy provided issued its second profit warning in six months.
The Big Six supplier said it will not raise prices for British Gas customers this year after losing 180,000 households.
However, despite admitting that wholesale energy costs have fallen, it made no offer to cut prices, adding that group profit will be 10 per cent lower than City expectations this year.
Last autumn, British Gas raised bills for dual-fuel customers by 9.2 per cent; 2014 looks set to be the first year Britain’s biggest domestic supplier has not raised bills since 2009.
The energy giant blamed the drop partly on warmer weather in the UK — which meant gas consumption was down 25 per cent in the first four months of the year, and electricity usage off 10 per cent. It also said that extremely cold weather in the US “resulted in significant one-off additional costs”.
The energy provider conceded that the exodus of 180,000 customers from British Gas this year was because of “fierce” competition, “particularly from smaller suppliers who are benefiting from an exemption from some environmental obligations.”
Finance director Nick Luff hinted that British Gas’ price freeze could continue next year. Luff — who is leaving Centrica for the same job at Reed Elsevier later this year — said: “The market looks reasonably well supplied… in a competitive environment you’ll see that reflected in retail prices, potentially.”
Centrica also announced plans to sell three of its biggest UK power stations — Langage, Humber and Killingholme, which provide more than half of its power generation in this country — for about £500 million. Luff said the power stations were losing a “significant” amount of money.
Centrica is also hunting for a new chief executive after £2 million-a-year boss Sam Laidlaw indicated that he wants to step down this year.
However, Angelos Anastasiou, utilities analyst at Whitman Howard, suggested Centrica’s profit warning could help ease one of the energy giant’s problems: “A profit warning is never good news, but it will perhaps highlight that UK energy supply is not just a ‘money for old rope’ business — a fact that might be welcome ahead of the Competition investigation set to start in July.”
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