Profits at British Gas fell to a record low of £80 million last year as customers used less energy in the warmer weather and the pandemic left households struggling to pay their bills.
Its parent company Centrica reported a 31 per cent drop in operating profits to £447 million as it was also hit by the impact of lower commodity prices and businesses using less energy during lockdowns.
British Gas is Britain’s biggest household energy supplier but has been losing customers for a decade and reported a further 2 per cent drop to 6.9 million households last year. Chris O’Shea, the Centrica chief executive, is attempting to revive the group’s fortunes but warned: “It won’t be easy.”
Shares in the FTSE 250 group fell by as much as 5 per cent in early trading as it warned that “significant uncertainties” remained for this year, it was unable to give any earnings or cashflow guidance and was not ready to resume paying a dividend.
On a statutory basis it reported a £362 million operating loss from continuing operations, driven by £1.6 billion of exceptional impairments primarily related to lower commodity prices. That was a reduced loss on 2019 owing to fluctuations in the value of derivatives contracts.
Centrica has lost 75 per cent of its value in the past five years as British Gas lost customers to cheaper rivals and had its profits squeezed by the government’s price cap on energy bills, which forced it to cut prices for millions of households on standard tariffs from the start of 2019.
O’Shea, who took the top job last year, is attempting to “arrest the decline” with a cost-cutting programme and is selling off “non-core” parts of the business.
The company struck a £2.7 billion deal to sell off its North American business Direct Energy last year and is also attempting to sell its North Sea oil and gas business, Spirit Energy, and its 20 per cent stake in Britain’s nuclear plants.
Centrica is in the middle of an industrial dispute with thousands of engineers in the GMB union, whom it has threatened to “fire and rehire” unless they accept new conditions that would require them to work increased hours.
Centrica cut its dividend in 2015 and again in 2019 then suspended payment of the 2019 final dividend last year after the pandemic hit. It said today that it was proposing no dividend for 2020 but recognised “the importance of dividends to shareholders and intend to recommence dividends to shareholders when it is prudent to do so”.