British Gas-owner Centrica loses £1bn as energy cap dents profits
Centrica (CNA.L) on Thursday posted a pre-tax loss of more than £1.1bn ($1.4bn) for its 2019 financial year, as the British Gas owner pointed to the recently introduced government energy price cap and falling natural gas prices.
While revenues declined by just 3% to £22.7bn, before-tax profits fell by almost 300%, from £575m in 2018.
The company was dented by a series of one-off accounting charges, including a £476m charge related to the writing down of its upstream oil and gas exploration and production assets.
It also spent £356m on its cost-reduction programme, which has seen it axe thousands of jobs in recent years.
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Centrica closed out 2019 with almost 3,600 fewer employees, bringing its total workforce to around 26,900 people.
“2019 operating profit and earnings were materially impacted by a challenging environment, most significantly the implementation of the UK default tariff cap and falling natural gas prices,” Iain Conn, the chief executive of Centrica, said on Thursday.
The firm’s energy supply business, like other “big six” electricity and gas providers, has been stumbling for several years in the face of younger upstart competitors and the newly introduced government energy price cap for 11 million homes.
In January 2019, default tariff energy prices were capped in the UK for the first time by the energy regulator, Ofgem.
Centrica warned in November that it was contending with “continued high levels of price competition and market switching,” but said that customer losses were slowing.
The company said on Thursday that it lost a “significantly lower” 286,000 customers in 2019, and that losses in the second half of the year were lower than in the first half.
The British Gas owner had lost nearly 750,000 customers in 2018, as the company struggled with Conn’s plan to refocus the business on its customer-facing divisions.
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Conn, who will step down from the top job later this year, said the company would “deliver earnings momentum” from its core customer divisions, but warned that its oil and gas production arms were likely to be impacted by lower prices.
“2020 will be another busy year as we complete the re-positioning of the company towards the customer, focused on our strengths of energy supply and its optimisation, and on services and solutions centred around energy, with an emphasis on helping our customers transition to a lower carbon future,” he said.
