British Gas owner Centrica falls to £360m loss as warm weather and lower prices bite
British Gas owner Centrica said today that it fell to a £362m statutory loss due to a combination of coronavirus, lower commodities prices, and a spell of warm weather.
The loss is less than half the £783m hit the firm reported last year.
It also said it would not pay out a divided for last year, adding it would not “recommence dividends to shareholders when it is prudent to do so.”
Shares in the firm fell 4.6 per cent during this morning’s trading.
Profit at the services provider slipped 31 per cent to £447m, while operating profit at British Gas fell 35 per cent to £80m.
Half of that drop was the direct result of a spell of unseasonably warm weather, the firm said.
Despite the loss, Centrica’s management struck an optimistic tone this morning, which Hargreaves Lansdown analyst William Ryder said was due to the £2.7bn sale of subsidiary Direct Energy.
“[The sale] gives Centrica a lot of flexibility moving forward, and is enough to put the balance sheet in good shape while filling some of the hole in the pension scheme”, he said.
“Paired with a restructuring plan that’s simplifying the group’s management structure and reducing headcount, and we can see why the group might be feeling optimistic.”
Centrica also announced a commitment to be a net zero firm by 2045, five years ahead of a previous target, alongside the figures.
Today’s results come at the end of a challenging year for the firm, with revenues from energy supply plunging due to the pandemic.
The former heavyweight was ignominiously dismissed from the FTSE 100 as a result of the tumble.
According to a trading update last month, business energy demand is still down 15 per cent, as is the firm’s boiler installation programme.
New boss Chris O’Shea took steps to limit the damage by cutting Centrica’s dividend, before unleashing a wholesale restructuring that saw 5,000 jobs cut.
At the moment, the firm is mired in an industrial dispute with the GMB union, which will start a new four day strike on Friday.
Commenting on today’s results, O’Shea said: “We have made a good start to the turnaround of Centrica, with the sale of Direct Energy now complete and our significant Group restructure on track.
“However, our journey to transform has only just started, as we seek to restore shareholder value by improving customer experience, retention and employee engagement, while maintaining a strong balance sheet. It won’t be easy, but I am confident we have the people, the brands and the market positions to deliver a successful turnaround in the coming years.”