13th May 2019 07:18
LONDON (Alliance News) - British Gas-owner Centrica PLC has traded in line so far in 2019, it said Monday, though the company has faced several headwinds.
The UK tariff cap has led to a one-off GBP70 million impact. This has combined with warmer-than-normal weather and falling natural gas prices in the UK to hold back performance in the first four months of 2019.
Centrica also said outages at the non-operating Dungeness B and Hunterston B nuclear power stations have continued.
In response, Centrica has made "good" progress on cost controls and efficiency, and also completed the sale of the non-core Clockwork Home Services unit in North America, for USD300 million.
The Centrica Consumer business lost 20,000 customers in the first four months of 2019, as 234,000 customer accounts left in the UK.
"This includes the impact of a spike in customer churn in March and April following the announcement of a significant increase in the level of the default tariff cap," said Centrica.
"However, the number of customer accounts exposed to the new UK default tariff cap remained broadly flat over the period."
In North America, warmer weather held back performance, though the Distributed Energy & Power and Connected Home units achieved strong revenue growth in the fourth month period year-on-year.
Production from Spirit Energy was "slightly" ahead of expectations, Centrica said.
The problems so far in 2019 will hamper first half performance, Centrica said, and may also hold back performance overall in the calendar year.
However, the FTSE 100 firm is reiterating 2019 guidance, including for adjusted operating cash flow between GBP1.8 billion and GBP2.0 billion, and net debt of between GBP3.0 billion and GBP3.5 billion.
Centrica will release results for the first half on 2019 on July 30, and by then it will have further clarity on commodity prices, UK energy supply dynamics, and the outcome of its triennal pensions review, amongst other things, it said.
Alongside the results Centrica will provide a strategic update, and more detailed guidance for the future.
Chief Executive Iain Conn said: "Although operational performance has been largely in line with our plans, external factors have presented challenges for Centrica during the first four months of 2019, in the form of the default tariff cap, warm weather, and falling gas prices. We have also experienced extensions to nuclear outages.
"However, we continue to focus on those things we can control and as a result, we expect to achieve our 2019 cash flow and net debt targets, while we are making further progress on cost efficiency delivery and on demonstrating margin capture capability. We intend to provide a strategic update regarding our portfolio and prospects at the time of our interim results in July."
Centrica is holding its annual general meeting on Monday, with the Times on Saturday reporting Conn faces a potential shareholder revolt over executive pay.
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