10th Dec 2015 07:34
LONDON (Alliance News) - Centrica PLC on Thursday said earnings remain on track for 2015 despite a challenging backdrop and price cuts at British Gas, as the company continues to cut its expenditure.
The UK energy and service company said it is on track to meet full-year expectations despite commodity price falls, lower margins at its power generation business, and a second price reduction at its British Gas unit.
Centrica said it is on track to deliver over GBP2.00 billion of adjusted operating cashflow for the full year and said its cost cutting is either on track or ahead of expectations.
Capital expenditure on exploration and production will be below GBP800.0 million in 2015 before falling even further to below GBP600.0 million in 2016. By the end of 2016, Centrica is expecting cash production costs to have fallen by GBP100.0 million compared to 2014 levels.
Overall, total organic group capital expenditure is expected to be "slightly lower" than its original target of GBP1.05 billion in 2015, Centrica said.
In terms of trading, UK residential energy supply margins are "expected to be within the range of recent years" in 2015, but margins in the second half of the year are down compared to the first half as British Gas reduced its residential gas tariff by 5%, its second cut this year.
The number of customer accounts at British Gas has remained broadly flat year-on-year, the company added.
At British Gas Business, Centrica said it has resolved problems with the billing system and said it expects the unit to make a "small" operating loss in 2015.
Looking at production, Centrica said it is confident it will beat its full-year target to produce 75.0 million barrels of oil equivalent.
The company said net finance costs for 2015 will total around GBP300.0 million.
Chief Executive Iain Conn said: "I am pleased with our progress since we announced our strategy in July. 2015 has been a difficult year, and against challenging external factors Centrica is establishing a solid base from which to deliver for our customers and shareholders. We are seeing underlying performance improvement against a softening commodity market, and have concrete plans for executing our strategy."
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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