British Gas owner Centrica has said its profits are on track, after the “beast from the east” cold snap led to higher demand for energy but drove up callout costs for boiler repairs.
The UK’s biggest energy supplier had its busiest ever week for boiler repairs during the cold weather in February and March, leading to callout costs that will drive its services unit’s first-half profits down compared with last year.
The rate of customers leaving British Gas slowed, from 823,000 quitting between July and October last year to 111,000 in the first fourth months of 2018. But the figures do not reflect the impact of the company’s recent above-inflation price hike, which takes effect at the end of this month.
Npower price rise sparks widespread criticism
Although Centrica has largely withdrawn from oil and gas production, and large-scale power generation, its Morecambe Bay gas field suffered outages. Its 20% stake in the UK nuclear’s power fleet will also suffer this year because cracks in one reactor have seen it taken temporarily offline.
Nevertheless, Centrica said it was on track to hit its targets for 2018, including holding dividends at 12p per share.
The company said it was making “good progress” on its £1.25bn-a-year cost-cutting programme. About 1,000 of 4,000 planned job cuts will have taken effect by the year’s end.
The number of connected home customers – those using its Hive smart home devices – is set to reach 1 million this week. Its decentralised energy business has also seen growth.
Iain Conn, the Centrica chief executive, said the impact of the government’s price cap on standard variable tariffs (SVTs) remains uncertain, but the company expects the measure to be in place by the end of the year.
The company now has 3.7 million customers on SVTs, down from 4.3 million at the end of 2017. It expects to cut that further, to about 3 million by the time such tariffs are capped.
Analysts said there had been good progress on shifting people off the tariffs and on to better-value fixed deals.
Centrica’s share price was up slightly, to 148.40p in early trading on Monday, but is still about a fifth lower than before Theresa May confirmed the price cap last October.