Centrica, the owner of British Gas, today struck a profits warning after warmer weather meant Britons kept the heating off for longer while safety shutdowns at major nuclear plants hit the firm’s bottom line.
Britain’s biggest energy provider also admitted it felt the pain of 50,000 customers quitting for rival providers in the past four months.
Meanwhile, profits from the upstream division, where Centrica sources and produces gas and electricity, took a hit from low oil and gas prices.
As a result, Centrica’s earnings per share this year are likely to be almost 10% lower, in the range of 19p-20p, down from the 21p-22p forecast in July.
The City was disappointed by the results — a gloomy “goodbye” from Sam Laidlaw, Centrica’s long-standing chief executive, who departs in January — and sent the shares down by 3p, or 1%, to 295.8p.
The Big Six energy giant had already struck a profits warning 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 UK weather at the start of the year.
“We’ve seen consistently warmer weather through the autumn than we would expect normally. 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,” he added.
Bell promised that reactor cracks at EDF’s Heysham 1 and Hartlepool nuclear plants, in which Centrica has a 20% 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 mostly repairs boilers.
But 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 alerted to the fact that they could get the same gas and electricity for less if they opted for the Sainsbury’s branding.
Overall, Centrica said its average dual-fuel bills will be £100 lower this year than last, as the milder weather reduced average gas consumption by 21% in the first 10 months of 2014 and electricity by 7%.
