Centrica Profits Hit By Warm Weather
Centrica, owner of British Gas, has warned that the warm weather this year means profits will be lower than expected.
Centrica has warned that the unusually warm weather, including the mild start to the winter, has meant the company will have to scale back profit forecasts.
Centrica said domestic demand for gas has fallen 17% this year compared with last year and electricity usage is down 3%. The company blames the unusually warm weather experienced over recent months.
Centrica also blamed higher wholesale gas costs for a fall in profits. Wholesale gas prices are 26% higher than they were a year ago. Centrica says these factors have meant British Gas residential has been making a loss since April, at least until tariffs were increased in August.
It’s not only residential consumption that’s been lower than a year ago. Business energy use has also fallen as businesses have been hit by both the mind weather and weak economic conditions. Business gas tariffs have also risen this year but business gas usage has dropped 15% while electricity consumption has dropped 12%.
The number of customer accounts has also fallen this year from 16.1 million to 15.9 million in the summer. This may have been the result of British Gas increasing gas prices by 18% and electricity prices by 16% in August as reported by Utility Exchange at the time.
Centrica expects operating profits for this year to be slightly lower than the expected forecast of £2.6 billion. Last year operating profits were at £2.4 billion.
In a trading statement the company said “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”.
Yesterday British Gas announced it was cutting around 850 jobs across the country in an attempt to cut costs. Jobs affected will include call centre roles and back office staff from the company’s services business which sells boiler care contracts.