British Gas loses 178,000 energy customers in six months
British Gas now supplies 178,000 fewer home energy customers than six months ago, while 38,000 customers have ditched British Gas “Home”, its repairs and maintenance service.
Its parent company Centrica made a £446m loss in the first six months of 2019, compared with profits of £704m in the same period last year.
The company blamed “an exceptionally challenging environment in the first half of 2019”, as well as the energy price cap and the burden of making additional pension contributions for staff.
Chief executive Iain Conn has also announced that he will step down next year. He has faced increasing pressure to quit after a steady decline in the company’s market value.
British Gas isn’t the only big player in the energy sector to be under pressure. Last week saw Scottish Power announce that it had lost 120,000 domestic energy customers in the past year, with profits falling 71 per cent.
Victoria Arrington, spokesperson for Energyhelpline, said: “The customer exodus from the big six continues – with 178,000 leaving British Gas in the first six months of 2019.
“Profits have also been hit by the price cap, which forced down suppliers’ standard prices in the first quarter of the year, putting a big squeeze on them. Centrica might be hoping for a better second half to the year – but with the price cap expected to be reduced in early August they will be relying on their services division to make the profits.
“The company is investing more into low carbon energy. This year so far, 50 per cent of Energyhelpline customers switched to a green tariff. As going green becomes more financially viable, Centrica could be able to win back business with new eco offerings. However with the retail market tougher than ever, it might not be ‘easy being green’ for the British Gas owner.”
What do falling profits mean for shareholders?
Centrica slashed its interim dividend by 58 per cent to 1.5p a share. It said the full-year dividend total will also be cut by 58 per cent, from 12p to 5p a share. The company’s share price fell by 10 per cent following the announcement and now stands at about 74.84p.
Ian Forrest, investment research analyst at The Share Centre, said: “There’s no doubt these are poor figures and the market responded with a 10 per cent drop in the share price, taking them down to a new low.
“The dividend cut was widely expected, although perhaps not quite on the scale announced but is a major blow for investors. Centrica is clearly trying to do what it can to help the situation, such as the sale of its oil and gas assets and exiting its nuclear power business.
“Given the shares have fallen by 70 per cent since Conn took over in 2015 it is probably right to pass the reins on to someone else. At current levels the shares are a medium to high risk hold only for investors who believe his successor can turn things around with no further cuts in the dividend.”