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British Gas owner blames energy price cap for dire results

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Written by: Paloma Kubiak
13/02/2020
British Gas owner Centrica posted a 35% fall in profit for 2019, blaming the energy price cap and falling natural gas prices for its poor performance.

Headline profit fell from £1.3bn in 2018 to £901m in 2019, Centrica’s preliminary results reveal.

But British Gas reported consumer customer account numbers up 3% to 722,000 though it had a net loss of 286,000.

Centrica Group chief executive, Iain Conn, said it faced a challenging environment which impacted profit and earnings and cited the UK default tariff cap as one of the reasons behind its slump.

The energy price cap (default tariff) was introduced in January 2019 and limits how much suppliers can charge for each unit of gas and electricity for customers on standard variable tariffs.

Just last week the energy regulator announced the price cap is set to fall in April from £1,179 to £1,162.

Conn said: “Against this backdrop Centrica delivered growth in customer accounts, higher net promoter scores, significant cost efficiencies in excess of our target, and full year adjusted operating cash flow and net debt within its target ranges. As expected, performance during the second half was much improved compared to the first half, demonstrating momentum as we enter 2020.

“2020 will be another busy year as we complete the re-positioning of the company towards the customer, focused on our strengths of energy supply and its optimisation, and on services and solutions centred around energy, with an emphasis on helping our customers transition to a lower carbon future.”

Russ Mould, investment director at AJ Bell said Centrica has a big question mark over what it will look like in the future.

He said: “Centrica belongs to this group of ‘challenged’ FTSE 100 members because the public have been turning their back on the British Gas brand and management seemed to have lost focus in recent years. It has a plan to get back on track but the journey is likely to be very bumpy.”

Full year dividend per share was scaled back to 5p in 2019 from 12p in 2018. Following the results, shares fell 16% and stand at 71p.

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