Centrica's (CNA) profits collapsed in the first half. But this was not the work of meddling politicians or regulators. Centrica was battling a far more fearsome opponent - bad weather. A mild winter in the UK meant British Gas customers used less heating. "We sold less gas and made less money on it," says chief financial office Nick Luff. Operating profit in British Gas residential supply dropped by a quarter to £265m as a result.
In North America, Centrica had the opposite problem. The weather was too cold. A polar vortex caused huge disruption to the wholesale energy market and saddled Centrica with an extra $110m (£65m) of costs.
Broker Whitman Howard expects to trim its full-year earnings per share forecast to 22p from 22.6p (from 26.6p in 2013). Mr Luff says the group should return to earnings growth in 2015 as the recent acquisition of Irish energy business Bord Gáis kicks in and the North America and services businesses expand.
The group is "hoping for more normal weather" next year. But the political climate is likely to remain chilly. Another storm was brewing with the release of these results which suggested British Gas's profit margin was half of what Ofgem claimed. Mr Luff described Ofgem's estimates as "unhelpful" and based on "theoretical models" rather than reality.
| CENTRICA (CNA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 313p | MARKET VALUE: | £15.8bn | |
| TOUCH: | 313-314p | 12-MONTH HIGH: | 403p | LOW:302p |
| DIVIDEND YIELD: | 5.5% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 98p* | NET DEBT: | 104% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 13.7 | 1.5 | 15.8 | 4.92 |
| 2014 | 15.7 | 0.9 | 10.5 | 5.10 |
| % change | +15 | -40 | -34 | +4 |
Ex-div:24 Sep Payment:12 Nov *Includes intangible assets of £4.9bn, or 97p a share | ||||
