British Gas owner Centrica today revealed that customer numbers plunged in the UK, as it blamed a combination of weak commodity prices and warmer weather in North America for a drop in earnings.
Revenue dropped by 13 per cent in the six months to 30 June, to £13.4bn from £15.5bn.
Adjusted operating profit was down 12 per cent to £853m from £970, and adjusted earnings fell by 14 per cent to £507m, from £587m.
The company increased its interim dividend by one per cent, to 3.6p from 3.57p.
Why it's interesting
Centrica reported that its UK home business, British Gas, lost three per cent of its customers, or 399,000, in the first half of 2016.
The group said this included the "impact of a significant roll-off of long-term fixed contracts in the first quarter", but also noted: "Market conditions remain competitive for UK home, with falling gas and power prices supporting the growth of new suppliers, historically high levels of energy supplier switching, and changing customer demand for services. Against this backdrop, our focus remains on improving customer service, developing innovative solutions and reducing costs."
The decline in UK customer numbers led to a six per cent drop in operating profit for the region.
However, Centrica's numbers were ahead of analysts' expectations. Angelos Anastasiou, utilities analyst at Whitman Howard, noted that cash flow was strong at the group and said an increased dividend in 2016 "seems eminently achievable".
What Centrica said
Iain Conn, group chief executive, said: “The first half of the year has been demanding for Centrica, but the response has been strong and I am encouraged by the progress we have made. We are delivering underlying performance improvement and are building a robust platform for customer-focused growth.
"I remain confident in our ability to deliver both attractive returns and underlying cash flow growth, as we continue to implement our strategy.”
While the group blamed low oil prices and the weather for its earnings decline, losing a huge chunk of customers in the UK can't have helped matters - but shareholders were still impressed that the results were ahead of expectations, pushing the stock up by more than one per cent in early trading.