Profits at British Gas fell to a record low of £80 million last year as customers used less energy in the warmer weather and as the pandemic left people struggling to pay their bills.
Centrica, its parent company, reported a 31 per cent drop in adjusted operating profits to £447 million after being hit by the impact of lower commodities prices and a “drastic reduction” in business energy usage during lockdowns.
British Gas is Britain’s biggest household energy supplier, but it has been losing customers for a decade. Yesterday it reported a further 2 per cent drop to 6.9 million households last year.
Chris O’Shea, 47, Centrica’s chief executive, is trying to revive the group’s fortunes with a restructuring and cost-cutting programme. He said that the decline in customer numbers had “slowed massively in the second half of the year”, but added that it was “too early to declare victory”.
Shares in the FTSE 250 group fell by 1½p, or 2.6 per cent, to 52p as it warned that “significant uncertainties” remained for this year, that it was unable to give any earnings or cashflow guidance and that it was not yet “prudent” to resume paying a dividend. It suffered £1.6 billion of impairment charges.
Centrica has lost 75 per cent of its value in the past five years as British Gas loses customers to cheaper rivals and as its profits are squeezed by the government’s price cap on energy bills, which has forced it to cut prices for millions of households on standard tariffs.
The record low British Gas domestic energy profits were down 35 per cent on the previous year, reflecting a £40 million hit from the warmer weather and a £40 million provision for extra bad debt. The figures compare with profits of £466 million two years ago before the price cap was introduced and record high profits of £742 million for the division a decade ago.
Centrica struck a £2.7 billion deal to sell Direct Energy, its North American business, last year and is also seeking to sell Spirit Energy, its North Sea oil and gas business, and its 20 per cent stake in Britain’s nuclear plants. It said that the nuclear sale was paused while operational problems with some plants were addressed.
The group is in the middle of an industrial dispute with thousands of engineers in the GMB union who it has threatened to “fire and rehire” unless they accept new conditions that would require them to work increased hours. O’Shea said the situation was “really unfortunate”, but talks had given “the basis hopefully for an agreement” that was now being presented to staff.
On a statutory basis, including its now-sold North American business, Centrica reported a net group profit of £41 million, up from a £1 billion net loss a year earlier, reflecting fluctuations in the value of derivatives contracts.