The British Gas parent company said it has revised its 2014 earnings 10 per cent lower to between 19-20 pence per share, while its residential profit margins are set to be a “lower than expected” 4 per cent.
“The Group has faced a number of challenges in the year to date, in particular mild weather in the UK and the Polar Vortex in North America, trading conditions for British Gas Services, and the impact of boiler inspections at the Heysham 1 and Hartlepool nuclear power stations,” the company said.
The company said it expects its average residential dual fuel bill to fall £100 lower year-on-year as a result of lower energy use in homes. The average residential gas consumption for the first ten months of 2014 was 21 per cent lower than for the same period last year, while average electricity consumption 7 per cent lower, the company said.
In addition, the generation side of its business took a hit following the unplanned shutdown of four of EDF’s nuclear reactors, of which Centrica holds a 20 per cent stake. The nuclear safety inspections required for the Heysham and Hartlepool reactors caused total nuclear generation to fall 4 per cent year-on-year Centrica said.
Lower nuclear output combined with weaker wholesale gas prices resulted in an increase in gas-fired power generation over the year, but Centrica notes that market conditions for gas generation remain difficult overall.
Although falling oil and gas prices could impact the company’s 2015 financial performance Centrica said it expects earnings to grow over the next year.
“In addition to an expectation of a return to more normal weather conditions, we expect increased underlying profit in Direct Energy, British Gas Services and British Gas Business,” Centrica said.
British Gas has seen its customer base stabilise after an earlier loss of 50,000 customers, due to the launch of its Sainsbury Energy tariff. The company added that it expects to meet its energy efficiency obligations under Eco ahead of schedule.