Centrica (LON:CNA) is doing the right thing in choosing quality customers over quantity, analysts at Hargreaves Lansdown have said. The comments came as the British Gas owner updated investors on its performance yesterday, reiterating its full-year targets, but posting a drop in UK domestic customers since the start of the year.
Centrica’s share price has fallen deep into the red in London this morning, having shed 4.15 percent to 194.00p as of 08:30 BST, underperforming the broader London market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.22 percent higher at 7,317.06 points. The group’s shares have lost more than three percent of their value over the past year, and are down by some 13 percent in the year-to-date.
Citywire quoted Hargreaves Lansdown analyst George Salmon as commenting yesterday that although Centrica’s customer numbers continued to fall, “adopting a quality over quantity approach feels like the right thing to do, after all slashing prices to keep everyone on board can be a dangerous tactic”.
“Investors will be hoping that with customer offers shifting to a more loyalty-based approach and service levels improving, the group can build a strong and stable base of valuable customers,” he pointed out.
The analyst’s comments came after the British Gas owner reported yesterday that its UK Home energy supply accounts were down 261,000 in the year to date, reflecting the company’s “planned roll-off of collective switch tariffs and a greater shift towards enhanced segmentation and customer value, not only volume”.
The update came after the UK’s ruling Conservative Party recently signalled that it would cap domestic energy prices should it win June’s snap election. Hargreaves Lansdown’s Salmon noted that lower consumption with falling gas prices and another drop in customer numbers could mean ‘black clouds overhead’ with those clouds looking “even denser given the Conservatives have prioritised introducing more price regulation for the ‘Big 6’ if they win the election”.