UK price cap, warm weather hit Centrica trading in first quarter

Growth in Ireland, North America offset decline in UK customer accounts

Centrica chief executive Iain Conn. Photograph: Dominic Lipinski/PA Wire

Centrica chief executive Iain Conn. Photograph: Dominic Lipinski/PA Wire

 

Centrica said factors from the UK price cap to warm weather impacted trading in the first four months, but maintained its full-year outlook.

The UK tariff price cap, warmer-than-average weather, falling UK natural gas prices and outages at UK nuclear power stations led to “challenging” trading, Bord Gais Energy owner Centrica said on Monday in a trading statement. The utility still sees adjusted operating cash flow for the full year of between £1.8 billion and £2 billion.

The company said growth in North America, Ireland and its connected home offering mostly offset a reduction of 234,000 customer accounts in the first four months of the year in its UK Home energy supply market.

Customer losses on energy accounts is just one of the headwinds the UK’s biggest energy supplier is facing. The government-imposed cap on consumer energy bills hit profits in the first quarter to the tune of £70 million this year. Britain’s energy market regulator boosted the cap on how much utilities can charge customers for electricity and natural gas to £1,254 in February.

The “Big Six” utilities in the UK have come under pressure from smaller, cheaper, and more nimble market entrants who have taken significant market share from them.

Centrica said in February that it planned £750 million of asset sales and cost cutting in 2019.

“We continue to focus on those things we can control and as a result we expect to achieve our 2019 cash flow and net debt targets, while we are making further progress on cost efficiency delivery and on demonstrating margin capture capability,” chief executive Iain Conn said in the statement.

The utility plans non-core divestments of £500 million. Centrica plans to cut between 1,500 to 2,000 jobs.

Its full year net debt is expected to be between £3 billion to £3.5 billion. – Bloomberg