British Gas owner Centrica hints at price hikes as cold weather and soaring wholesale energy costs slash profits
- Centrica said it is keeping its prices ‘under review’ as commodity costs soar
- At its household electricity and gas arm, half year profits fell 20% to £430m
- It blamed cold weather, rising costs and the Government’s pre-payment cap
British Gas owner Centrica revealed today that rising commodity costs and freezing weather weighed on its bottom line in the first half of the year as it continued to lose hundreds of thousands of customers..
Centrica’s share price slid more than 5 per cent in early trading, as the firm hinted at further tariff hikes, claiming it would keep its customer prices ‘under review’ while wholesale energy costs continue to surge.
Further hikes would be poorly received, as more than four million British Gas customers were already hit by a price increase at the end of May.
Centrica shares were knocked on the news, falling more than 5% in early trading
But Centrica warned that wholesale costs had risen further since then – a trend that has prompted some of its competitors to follow suit.
‘We are keeping the movement of wholesale energy prices and their impact on our cost of supply under review,’ the firm said.
Operating profits at the firm’s household gas and electricity supply arm tumbled 20 per cent to £430m in the last six months as this division was also stung by last year’s pre-payment price cap and the ongoing loss of customers.
The results showed that the group lost another 341,000 UK household energy accounts in the first half as customers continue to switch to smaller rivals.
However, Centrica blamed the Government’s pre-payment price cap for the loss of 50,000 of those accounts, and insisted that the exodus has slowed
Centrica said it was on track to make £200m of savings in 2018, which includes axing 1,000 jobs as part of a wider plan to trim the workforce by 4,000 by 2020.
The group, which posted a 4 per cent decline in underlying operating profits to £782m, added that it has ‘plans in place’ to manage a temporary cap on all default tariffs that is set to be imposed.
The British Gas owner said it was burned in the period by cold weather and soaring costs
Group boss Iain Conn said: ‘In a first half in which we experienced rapidly rising commodity prices, extreme weather patterns, continued competitive pressures and ongoing political and regulatory uncertainty, Centrica demonstrated resilience from its portfolio of businesses.’
He added: ‘We continue to make progress on implementing our strategy. We have developed new propositions and delivery capabilities in both customer divisions and our cost efficiency programme is on track.’