LONDON (Reuters) - Britain’s Centrica, owner of top energy supplier British Gas, said its profits were hit by unseasonably cold weather earlier this year while customers continued to leave.
Adjusted operating profit at the company’s Consumer business fell 20 percent compared with the first half of 2017 to 430 million pounds ($565 million).
A nationwide cold snap, with temperatures as low as minus 10.3 degrees Celsius, hit Britain earlier this year, leading gas prices to spike to at least 10-year highs and electricity prices to soar more than 20 percent.
“Rising wholesale energy costs have put pressure on UK energy supply margins, and extreme cold weather resulted in additional costs in UK services,” the company said in a results statement.
Centrica CEO Iain Conn said the extreme weather proved “challenging” in the first half of the year and said the company also lost 340,000 British accounts during the period.
British Gas had around 13 million customer accounts.
Centrica and its fellow big six energy providers have seen their customer numbers shrink over the past few years, with smaller rivals, often offering cheaper prices, now controlling around 20 percent of the market, up from just 1 percent around 6 years ago.
Conn told journalists the company had no plans to mount a legal challenge to the British government’s plan to impose a price cap.
Earlier this month parliament approved a law capping the most commonly used standard gas and electricity tariffs to tackle what Prime Minister Theresa May called “rip off prices.”
Energy regulator Ofgem is expected to publish further details on how the measure will work in the coming months with the cap expected to be in place before the end of the year.
Centrica’s earnings before interest, tax, depreciation and amortization (EBITDA) rose 3 percent to 1.324 billion pounds ($1.74 billion) for the six months to June 30.
Centrica said higher commodity prices helped to swell earnings from its exploration and production (E&P) division which is now fully focused on North West Europe following the disposal of assets in Canada and Trinidad and Tobago in 2017.
Analysts at Jefferies warned full-year production at the E&P business was likely to be at the lower end of the company’s target range due to a prolonged outage at its Morecambe gas field. Jefferies said Tuesday’s results “imply downside risk” to 2018 full year earnings per share consensus.
Centrica said it remains on track to meet its full year targets and maintained its interim dividend at 3.6 pence.
It said it expects to deliver a full year dividend of 12 pence per share, as long as adjusted operating cash flow and net debt remain within target.
Centrica’s dividend yield, of around 8 percent, is one of the highest in Britain’s FTSE 100 index.
Shares in the company were down 4.5 percent at 146 pence by 0830 GMT.
Reporting by Susanna Twidale; Editing by Janet Lawrence