22nd Nov 2018 08:41
LONDON (Alliance News) - British Gas parent Centrica PLC on Thursday reported a drop in customer numbers and said that it expects to meet targets set at the time of its last annual results, despite a few operational challenges.
Shares were 7.7% lower at 134.35 pence each in morning trade, the worst performer in the FTSE100 Index.
The company's UK home energy customer numbers reduced by 372,000 in the four months to the end of October due to continued high levels of market switching and a second standard variable tariff increase earlier in August.
Centrica also reduced 2018 production guidance for its Spirit Energy business to 47.5 million barrels of oil equivalent from 50 million barrels guided earlier. In February, Centrica had guided for production of between 50 million barrels of oil equivalent and 55 million barrels.
This cut reflects unplanned stoppages as well as "operational issues".
The FTSE 100 company expects Spirit Energy's production for 2019 to be "broadly" similar to 2018. There is no 2017 comparable, as the joint venture was launched in the middle of 2017.
In the company's Nuclear division, operations have been hindered by "extended inspections and outages" at Scotland's Hunterston B and Dungeness B nuclear station in Kent, England, and these will have an approximate 0.2 terawatt hour impact.
Looking at other businesses, trading in commodity-exposed businesses are "highly competitive" in the UK, Ireland, and North America, with extreme weather proving a challenge in 2018. In non-commodity offerings, results are "encouraging".
For 2018, Centrica expects its dividend to remain at 12 pence per share, while adjusted operating profit and earnings before interest, taxes, depreciation, and amortisation will be higher year-on-year.
In 2017, it posted adjusted operating profit of GBP1.25 billion, down 17% year-on-year, and Ebitda of GBP2.14 billion, 9% lower year-on-year.
Adjusted operating cash flow for 2018 is guided to be between GBP2.1 billion and GBP2.3 billion, from GBP2.07 billion in 2017, which fell 23% on 2016. Net debt is set to be between GBP2.5 billion and GBP3.0 billion, from GBP2.60 billion in 2017, itself 25% lower year-on-year.
In other guidance, Centrica sees a GBP70 million one-off impact on operating profit in the first quarter of 2019 from Ofgem's energy supply price cap.
"As we have done over the last four years, we are focused on driving significant underlying improvements in performance and delivering attractive returns while re-positioning the portfolio towards the customer," said Chief Executive Iain Conn.
"Our efficiency delivery and new customer propositions are helping to offset the effects of strong competition and regulation in energy supply. Our financial performance has remained resilient despite weaker than planned volumes from our E&P and Nuclear activities and cash generation remains strong," he continued.
"Maintaining a focus on performance delivery and financial discipline and demonstrating resilient cash flows remain our objectives for 2019 and beyond, as we deal with the impact of the UK energy supply default tariff cap."
Results for 2018 will be released on February 21.
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