As anticipated, energy supplier Centrica expects full-year profit for British Gas to be significantly lower than last year, as it says this morning that we are in "unprecedented times for the energy sector" and market conditions "remain challenging". It residential energy supply margin will also be hit and is expected to be "slightly lower than last year, a little under five per cent after tax". (Release)
Tough conditions for British Gas, along with its decision to end auto-rollover contracts, continue to put margins under pressure, the company said. But its number of accounts were "broadly unchanged", at £15.7m at the end of October, two weeks after its price hike, which is effective from 23 november, was announced.
Centrica stressed that controversy around the price hikes comes as the sector sees a rise in cost in securing and supplying energy, too. Suppliers and politicians, it said, "both have a role to play in helping to minimise the impact of higher costs on bills and improving transparency to restore trust in the industry".
Prolonged cold weather in the first half of this year pushed residential gas consumption up, said the supplier - a four per cent increase like-for-like in the first ten months. Whilst Centrica initially used benefits arising from added consumption to absorb the higher costs it faced, this resulted in it being loss-making for a number of months. The result was the raising of gas and electricity prices, by 8.4 per cent and 10.4 per cent respectively.
Market pressure continues in North America, but Centrica is working on reducing costs and "offering innovative products". The company saw a fall in the number of accounts in its Direct Energy Residential division, but power and gas volumes were up 14 per cent and 16 per cent respectively in its Direct Energy business. Power margins, however, "remain tight".
Chief executive Sam Laidlaw said last week that he would give up his bonus for the year. The company expects its full-year earnings per share for 2013 to be "at similar levels to 2012".