21st Nov 2019 08:41
(Alliance News) - Centrica PLC, the owner of British Gas, on Thursday backed annual guidance after what it said has been a "solid" second-half performance.
Shares were 5.8% higher on Thursday morning in London at 76.94 pence each, making it one of the best performing FTSE 100 stocks early in the session. However, the value of the shares has halved in the past 12 months.
The utility firm delivered growth in customer accounts, higher margins, and returns in business energy supply in North America, it said, as well as strong trading in Europe.
This has helped offset the impact of further outages at the non-operated Dungeness B and Hunterston B nuclear power stations, in Kent and North Ayrshire respectively. Nuclear operations were put up for sale earlier this year.
Centrica did say it has also booked lower European wholesale gas prices, but noted the impact of Exploration & Production earnings will be mitigated, mostly, by forward hedging.
Centrica's improved trading comes after a difficult first half in which it sank to a significant loss, of GBP569 million, from a GBP415 million profit the year before.
Chief Executive Iain Conn said the period was "exceptionally challenging", though he did express a more confident outlook for the second half. Conn will be leaving in 2020.
The CEO said on Thursday: "Our performance has been solid so far in the second half of the year and we remain on track to achieve our full-year targets for both adjusted operating cash flow and net debt.
"I am encouraged by further growth in customer accounts and the recovery of business energy supply margins in North America, while we also continue to drive material levels of efficiency and maintain capital discipline."
Centrica backed 2019 guidance of adjusted operating cash flow at the lower end of GBP1.8 billion to GBP2.0 billion, and net debt within GBP3.0 billion to GBP3.5 billion.
The firm has cut capital investment guidance to GBP800 million from GBP900 million, and increased efficiency savings for the year to GBP300 million from GBP250 million.
"Full-year performance remains subject to the usual variables of weather patterns, commodity prices and operational and commercial performance in November and December," said Centrica.
Looking divisionally, Centrica's Consumer business increased customer accounts by 214,000 in the four months to October, with the ten-months to October figure up 528,000. Total accounts in the UK climbed 136,000 in the four months, despite a 107,000 fall in energy supply accounts.
"The rate of UK energy supply net losses was lower than in the first half of the year and significantly lower than in 2018, despite continued high levels of price competition and market switching," the firm said.
In North America, accounts were up 86,000 in the fourth months while in Ireland they were "broadly stable".
In Centrica's Business unit, customer account numbers were stable in the four-month period. Spirit Energy, the oil and gas business, is on track to meet 2018's production volumes.
Centrica is currently looking at selling its 69% stake in Spirit Energy, as announced at the halfway stage, deciding exploration & production is not a core operation. A sale of the nuclear business was announced at the start of 2019.
By George Collard; [email protected]
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