British Gas residential profits down 11%
23rd February 2017 | Commercial Energy
Centrica, the owner of British Gas (the UK’s largest energy supplier), said that it had lost more than 400,000 residential customers during 2016. It residential supply business fell 11% as it faced up to competition in the energy market.
The drop in earnings to £553m came as it lost 409,000 customers over the course of 2016. This compares to a drop off of 119,000 in 2015. Centrica said it had stemmed the exodus in the second half of the year after launching new deals, while complaint levels fell.
The results come a week after British Gas said it was extending a freeze on tariffs. Rivals announced they would put up their prices.
Profits for the wider group surged to £2.2bn compared to a loss of £1.1bn in 2015. This was when Centrica booked £2.4bn in a series of accounting write-downs.
Chief Executive Iain Conn said, “2016 was a year of robust performance and progress in implementing our customer-focused strategy.” Shares fell 3.7% by the close.
George Salmon, equity analyst at Hargreaves Lansdown, said Centrica was making “good progress” on earnings and cost savings. He continued by saying that the company’s dividend policy was still being held back by its past.
“Shareholders are still feeling the effects of the hangover from the decision to splurge billions on offshore exploration and production at just the wrong time,” he said.
UK energy suppliers have been under political pressure over the past couple of years over their treatment of household customers. Regulators have imposed a price cap for vulnerable pre-payment meter customers. Centrica said the cap would impact its revenue this year by £30m.
The UK energy supply market is highly competitive, with more than 50 suppliers. Mr Conn has previously said there was no need for Government intervention to make it more competitive.
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