British Gas burned by customers as prices rise

Investors in the owner of British Gas have been left feeling cold after Centrica warned its earnings would take a hit from a series of woes including a domestic energy customer exodus.

Shares in the FTSE 100 company fell 17% in early trading following the profit warning.

Centrica said it expected earnings per share in its current financial year to miss market expectations after a £46m writedown in its North America business and warmer-than-usual start to the winter in the northern hemisphere.

But it also cited troubles in its British Gas division, the UK’s largest domestic supplier at the top of the so-called ‘big six’.

The company said it had lost 823,000 domestic customers since 30 June – 150,000 of them going since it announced a 12.5% hike to its standard variable tariff (SVT) electricity charges in September.

British Gas confirmed plans, just this week,to end the controversial default billing for new customers by April amid Government efforts to cap the charges, with Theresa May branding SVTs a “rip-off”.

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Video: Price cap on household energy bills unlikely this year

Centrica said cost-cutting at British Gas would help offset some of the challenges though operating profits at the division would be in line with last year’s figure.

Iain Conn, Centrica’s chief executive, said: “Although some aspects of our delivery in the second half of 2017 have been disappointing, I remain encouraged by our progress in implementing our strategy.

“The balance sheet has been materially strengthened, and we continue to focus on improving our underlying performance.

Video: Why not just ban default tariffs?

“We have also provided a broad and definitive set of proposals this week to improve the UK energy market for customers and look forward to engaging with the Government and regulator in the coming weeks.”

Neil Wilson, senior market analyst at ETX Capital, said: “Earnings guidance has been slashed with management now guiding earnings per share (EPS) at 12.5p for 2017, significantly below the 15p consensus – which was already pretty low – before today’s update.

“The stock’s fall is pretty much in line with the 16% drop in EPS guidance.