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UPDATE 2-Centrica warns as households, businesses retrench
November 17, 2011 / 7:43 AM / 6 years ago

UPDATE 2-Centrica warns as households, businesses retrench

* Says 2011 earnings may be marginally lower than current forecasts

* Has 15.9 mln customer accounts, down slightly from start of year

* Says avg residential gas use down 17 pct, electricity use 3 pct lower

* Business gas use down 15 pct, electricity down 12 pct

* Shares down 1.6 percent

By Paul Hoskins and Adveith Nair

LONDON, Nov 17 (Reuters) - British Gas owner Centrica issued a profit warning, saying customers were shopping elsewhere following price hikes and using less electricity and gas due to economic uncertainty and warmer weather.

The utility, whose British Gas unit is the UK’s biggest household energy supplier, said customer churn had risen since it raised prices by as much as 18 percent and that account numbers had dipped since the start of the year to 15.9 million.

The drop in account numbers, which one analyst put at close to 100,000, was also due partly to Centrica ending doorstep sales in response to pressure from consumer groups.

Following the latest round of price hikes by Britain’s six dominant energy suppliers, gas prices are rising by an average of 15 percent this winter, just as austerity measures aimed at cutting government debt curb economic growth and reduce household incomes.

Britain’s rising dependence on energy imports is helping make household bills less affordable than at any time since the oil shocks of the 1970s. Deutsche Bank has said with price rises of 25 percent by 2015, a quarter of the country could fall into fuel poverty.

Centrica, which said in July conditions were “increasingly challenging” due to lower household disposable incomes, added that the market for central heating installations remained particularly difficult.

Apart from the weak economy, Centrica has also been hit by warmer weather which has dampened consumption relative to last year when Britain was hit by unusually bleak winter and the coldest December on record.

Centrica said average residential gas consumption was 17 percent lower and electricity use was down 3 percent in the 10 months to October. Business consumption fell 15 percent for gas and 12 percent for electricity.

“As a result of the unusually warm weather experienced in the UK in recent months, and the corresponding impact on consumption, it is currently anticipated that Centrica`s 2011 earnings may be marginally lower than current market expectations,” Centrica said in a trading statement.

The company had been expected to report a full-year pretax profit of 2.3 billion pounds ($3.6 billion), according to a Thomson Reuters I/B/E/S poll of analysts, 20 percent higher than the 1.9 billion pounds it reported in 2010.

Centrica said on Thursday that it still expected an increase relative to last year but did not specify by how much.

Shares in the company were down 1.6 percent at 290.2 pence by 1008 GMT.

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