Shares in Centrica (LON:CNA) have tumbled more than 16 percent in London this morning, as the British Gas owner warned that its full-year earnings would be lower than market expectations. The company further revealed that it had lost 823,000 customers in four months.
As of 09:32 GMT, Centrica’s share price had given up 16.32 percent to 136.64p, pressuring the benchmark FTSE 100 index which currently stands 0.27 percent lower at 7,399.25 points. The group’s shares have lost more than 31 percent of their value over the past year, and are down by some 40 percent in the year-to-date.
Centrica warns on earnings
The British Gas owner announced in a statement this morning that its full-year adjusted earnings per share are now expected to be around 12.5p, including a 0.8p impact from a one-off £46-million charge at its North American business, lower than market consensus. The company explained that the lower forecast reflected lower than expected adjusted operating profit in its UK and North America business, as well as the expected impact of warmer than normal weather across October and November.
The British Gas owner also updated investors on its recent performance, revealing that the number UK energy supply accounts at the end of October had reduced by 823,000 since June 30.
“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,” Centrica’s chief executive Iain Conn commented in the statement.
Analysts weigh in
“The scale of customer losses in the residential market in the UK is alarming,” John Musk, an analyst at RBC Europe, told Bloomberg. City A.M. meanwhile quoted Lee Wild, head of equity strategy at Interactive Investor, as commenting that “Centrica is already in a dark place given the exodus of customers from its British Gas business, and the market did not want to hear about a further deterioration both here and in North America”.
“Despite attempts to reassure that the generous dividend is safe, the risk of a cut remains very real as the government continues a crackdown on expensive energy bills,” the analyst pointed out.
Centrica’s results come after the company announced this week that it will scrap its standard variable tariffs for new customers and offer existing customers better deals.