British Gas profits set to fall in 2014 as a result of the milder weather
Centrica, the owner of the UK’s largest energy supplier, British Gas, has warned investors that a highly competitive market and lower consumption will result in lower revenue and profit in 2014.
As part of its interim statement, the company revealed that it expects residential energy supply revenue to be approximately 10 per cent below 2013 levels, due mostly to the fact that its downstream business in the UK has experienced lower consumption due to mild weather, an “unprecedented focus” on the energy sector and a highly competitive market for energy supply.
Average residential energy bills were approximately 10 per cent lower this winter than last, reflecting mild weather conditions, while Centrica also argued that the number of residential accounts on supply has decreased by 180,000 in the year to date.
Centrica chief executive Sam Laidlaw said: “Customer relationships are core to the long term health of Centrica. The investment we are making in smart connected homes and innovation is helping customers reduce and control their energy consumption, which is the most sustainable way to keep bills down. The combination of mild weather and our expectation that we will not change energy prices this year, means the average British Gas household energy bill is expected to be lower in 2014 than in 2013.
“The decisions and actions that management is taking across the group will leave the business well-placed for the long term. While earnings are anticipated to fall in 2014, we expect an improvement in 2015, assuming more normal weather conditions and reflecting the prospects for underlying growth in Direct Energy, UK gas storage, British Gas Services and British Gas Business” he concluded.