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British Gas lost 823,000 domestic accounts – nearly 6 per cent of its household customer base – over just three months according to its latest trading update.
Parent company Centrica said 150,000 customers left due to the supplier’s decision to hike prices by 12.5 per cent from September. A further 650,000 of the lost accounts related to “collective switch, white-label fixed price and prepayment tariffs”.
Chief executive Iain Conn said: “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. The balance sheet has been materially strengthened, and we continue to focus on improving our underlying performance.”
Despite the exodus, adjusted operating profits for the UK Home business over the full financial year are expected to be “broadly in line” with last year’s result of £810 million due to efficiency savings.
As part of the third quarter update, Centrica also announced that group profits would be lower than market expectations. Full-year adjusted earnings per share would be 12.5p compared to analyst estimates of around 15.5p, with the poor performance attributed to warmer than expected weather in October and November.
The company said “for a period of time” it would be “willing to operate with dividend cover from earnings below historic levels”, until the regulatory situation in the UK is more settled and it is able to increase profits from other areas.
Earlier today, shares in Centrica plummeted to their lowest level in 14 years.
The group claimed it is still on track to meet 2017 profit targets, having reduced costs by £384 million in 2016 and with a further £300 million of savings expected this year, exceeding its original target for 2017 by £50 million. Like-for-like headcount is expected to fall by more than 1,500.
Earlier this week, British Gas announced it will abolish Standard Variable Tariffs (SVTs) for new customers by 31 March next year, making it the third supplier to confirm such a move.
The announcement was made alongside a raft of measures the company believes could remedy failures in the domestic energy retail market, and which it claims are preferable to the introduction of the wide-ranging price cap proposed by government.
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