Thursday 20 February 2014

Centrica profits fall as 2% of customers take flight

Centrica profits fall as 2% of customers take flight

Centrica’s profits fell 2% last year while profits at its residential supply arm British Gas fell by 6%.

The firm’s chief executive threw the blame onto “unprecedented” and “intense political and media scrutiny” on the energy sector.

As for its business energy supply arm, the firm blamed the "ending" of auto rollover contracts "for the benefit of customers" for a drop in British Gas Business operating profits.

Centrica’s group profits were £2,695m in 2013, down from £2,743m the previous year.

British Gas made £571m from supplying energy to UK homes, a drop of £35m from 2012, after 2% of its customers fled.

The firm said this year it is “targeting a return to account growth” in UK residential energy and services.

Figures from consumer groups suggest the 'Big Six' energy companies - which includes British Gas - now supply 97% of homes rather than 99% they have in recent years.

Chief Executive Sam Laidlaw (pictured) said: "Recently we have seen unprecedented focus on the energy sector in the UK, with intense political and media scrutiny at a time when many customers have faced declining real disposable income.

“In British Gas, we have simplified our energy product range to just four residential tariffs, we have made further improvements to the transparency of our reporting, and we were the first energy company to reduce retail tariffs following proposed changes to the ECO programme.”

[caption id="attachment_69782" align="alignright" width="350"]Image copyright Centrica Image copyright Centrica[/caption]

He said market conditions are set to “remain challenging” in 2014 with “margin pressures and unusual weather patterns” on both sides of the Atlantic, rising costs of exploring for oil in the North Sea and “weak economics” for gas storage and gas-fired power generation.

Last week the Energy Secretary Ed Davey wrote to Ofgem asking the regulator to look at large gas profits - and even consider breaking up British Gas.

At the time Chris Weston, MD of British Gas defended the firm’s profits: “Our parent company Centrica does more than any other organisation to secure gas and power for British customers, with commitments totalling more than £60 billion, and we can only shoulder responsibilities on this scale if we are a profitable business.  In the last six years we have invested £1.85 for every £1 earned.”

Written by

Bruna Pinhoni

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