Centrica warns on profits after Britons turn off the heating


Click to follow
The Independent Online

Centrica, the owner of British Gas, has warned on profits after warmer weather meant Britons kept the heating off for longer, while safety shutdowns at big nuclear plants hit the company’s bottom line.

Britain’s biggest energy provider also admitted that it has felt the pain of 50,000 customers quitting for rival providers in the past four months, while profits in the upstream division – where Centrica sources and produces energy – took a hit from low oil and gas prices. As a result, Centrica’s earnings per share this year are likely to be 10 per cent lower, in the range of 19p to 20p, down from the 21p to 22p forecast in July.

The City was disappointed by the results – a gloomy “goodbye” from Sam Laidlaw, Centrica’s longstanding chief executive, who departs in January – and sent the shares down by 4.7p to 293.9p.

The energy giant had already warned on profits in May as it took in the impact of a particularly cold spell in the US – where Centrica runs the Direct Energy brand – and the mild British weather at the start of the year. “We’ve seen consistently warmer weather through the autumn than normal. By some measures it’s the warmest on record,” said Centrica’s acting chief finance officer, Jeff Bell. “Second, there was the problem with the nuclear spines.”

Mr Bell promised that reactor cracks at EDF’s Heysham 1 and Hartlepool nuclear plants, in which Centrica has a 20 per cent stake, were being resolved and that they would be up and running by the end of the year. Centrica also admitted to “challenges” at its British Gas Services business, which mainly repairs boilers.

But Mr Bell claimed the FTSE 100 giant is starting to reverse its decline in new customers after offering households a cheaper deal under its white-label arrangement with Sainsbury’s Energy. It is a controversial offer as British Gas customers are not being alerted that they could get the same gas and electricity for less if they opted for the Sainsbury’s branding

Centrica said its average dual-fuel bills will be £100 lower this year than last, as the milder weather reduced gas consumption by 21 per cent in the first 10 months of 2014 and electricity by 7 per cent.