14th May 2007 07:02
Centrica PLC14 May 2007 Centrica 2007 AGM Statement At the Centrica Annual General Meeting to be held today, the Chairman Roger Carrwill update shareholders on the Group's performance in the year-to-date and onthe outlook for the remainder of the year. Period Review Centrica has performed well through the early part of 2007 and delivered strongfinancial results in the period, with higher profits from downstream businessesmore than offsetting lower upstream contribution. Our downstream activities have all benefited significantly from unusually lowwholesale prices for gas and power. The industrial and commercial contractshave been profitable and we have continued to increase the number of British GasBusiness customers. The low wholesale energy prices have enabled us to reduceprices twice for residential customers. Since the announcement on 8 February ofour initial price cut, around 900,000 customers have chosen to join British Gas,an average of over 65,000 per week. Recently we have begun to grow our customerbase and currently have 15.8 million energy accounts on supply. We continue toinvest in improving service for residential customers, including recruiting 800additional front line customer service staff, whilst reducing costs elsewhere inthe business. Given the timing of the price reductions, we expect the resultsfrom the residential business to be weighted heavily towards the first half ofthe year. Profits from upstream gas production in the UK have fallen significantly as aresult of the lower wholesale prices. Gas production in the first four monthsof the year was 642 million therms, 48% lower than the same period in 2006. Wehave seen a stronger contribution from our power stations, where electricitygenerated was up 133% at 5.9 Terawatt hours as our gas-fired stations benefitedfrom low gas prices, allowing their output to displace that of the morecarbon-intensive stations of other operators. Our UK services business is on track to deliver a year of strong operatingprofit growth, driven by higher customer numbers and improved service levels.The UK storage business is also performing well, with all capacity for the 2007/8 storage year now sold, at an average price of 53.4p per Standard Bundled Unit. Internationally, in North America, our business is trading ahead of last yearwith a significant improvement in results in commercial supply and wholesaleenergy and a consistent performance from the rest of the energy supply business,despite increased competition for residential customers in some areas. Thereported result for North America will be impacted by the weakness of theCanadian and US dollars against sterling. In Europe we have also made anencouraging start to the year, with continued growth in the customer base inBelgium and Holland. Outlook Overall the outlook for Centrica in all markets is encouraging, althoughsignificant uncertainty remains over wholesale gas and power prices for thebalance of the year and over demand levels due to unusual weather patterns.However, if wholesale prices turn out in line with current forward market pricesand temperatures are seasonally normal, we would expect to deliver a Groupoperating profit above current consensus estimates, due to the significantout-performance already seen in the first half. In addition, the Group'searnings will benefit from a lower interest charge due to lower debt and a lowereffective tax rate, currently forecast to be below 40%, as a result of thesignificant shift in profits from upstream to downstream. Centrica is currently scheduling its pre-close statement for 25 June 2007, aheadof its half year results on 2 August 2007. Enquiries: Centrica Investor Relations +44 (0) 1753 494900 [email protected] Media Relations +44 (0) 1753 494085 [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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