British Gas sheds customers after hiking prices
The Big Six provider also took a hit from warmer-than-normal weather.
British Gas owner Centrica has revealed it lost another 823,000 household energy accounts since June and warned over its earnings outlook as it also took a hit from warmer-than-normal weather.
Britain’s biggest energy provider saw the customer exodus following its move to increase electricity prices by 12.5% in September, although it said 150,000 of the accounts lost were solely down to market switching trends following the tariff rise.
It now has 13.1 million customer accounts and 7.9 million customers.
The group said cost-cutting would help it hold annual earnings in its British Gas arm “broadly” flat on a year earlier, in spite of the customer account losses and a drop in demand for energy in the recent unseasonally warm autumn weather.
But it warned that its earnings per share would be lower than expected due to the British Gas woes as well as troubles in its North American arm, which is being hit by “highly competitive market conditions and low price volatility”.
Iain Conn, Centrica group 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.”
Shares tumbled by as much as 17% after Centrica’s warning.
Neil Wilson, senior market analyst at ETX Capital, said Centrica was heading for a record share price fall, with the stock already down two thirds in the last four years.
Centrica said 650,000 of its customer accounts lost in the four months since June were as a result of so-called collective switching, where large groups of households join forces with a new provider to get the best deal, as well as falling numbers at its white-label and prepayment tariffs.
But Centrica said it was still on track with aims to cut group-wide costs, saving nearly £300 million in 2017 on top of savings of £384 million in 2016.
The group is axing jobs as part of cost-cutting plans announced two years ago, with its workforce set to fall by 1,500 on a like-for-like basis this year.
Its update comes just days after British Gas moved to scrap its standard variable tariffs (SVTs) for new customers ahead of Government plans to impose a price cap on the costly energy products.
Around 4.5 million of Centrica’s customers – or about 60% – are currently on SVTs, with 70% of profits coming from the company’s SVT customer base.