Centrica targets net zero by 2045; reports £360m loss

Centrica aims to be net zero five years ahead of the national target and says its restructure is “on track”, as its latest results showed a £360 million operating loss last year.

Announcing its preliminary results for the year ending 31 December 2020 this morning (25 February), Centrica reported a statutory operating loss of £362 million, compared to -£783 million in 2019.

The British Gas owner said its earnings had been impacted by Covid-19, warmer weather and low commodity prices.

From its continuing operations the company reported that its earnings before interest, taxes, depreciation and amortisation (EBITDA) were down 25 per cent to £1.3 billion.

Adjusted operating profit was down to £447 million, while its retail arm saw its adjusted operating profit decrease 35 per cent to a record low of £80 million, £40 million of which being down to warmer weather.

Cash flow was up 10 per cent while net debt was down by £400 million to £2.8 billion.

British Gas Energy customers fell by 2 per cent to 6.9 million while British Gas Services customers fell by 3 per cent to 3.6 million.

The company further revealed a pre-tax exceptional charge of almost £1.6 billion in its continuing operations which includes restructuring costs of £274 million and impairments of £1.3 billion, largely on upstream assets due to the reduction in price forecasts and nuclear plant availability issues.

Centrica said it would continue with its decision to pause dividends for shareholders. No interim dividend was paid and the company is proposing no 2020 final dividend.

“We recognise the importance of dividends to shareholders and intend to recommence dividends to shareholders when it is prudent to do so”, the company said.

Net zero by 2045

Centrica also revealed it is aiming to reduce its own emissions to net zero by 2045. As part of its ambitions the company is set to launch a hybrid heat pump trial in the coming months which it says is an opportunity to prove the role hybrid heat pumps can play in decarbonising homes and is developing a paid-for proposition for air source heat pumps.

It will share more details on plans to deliver against its new climate goals when it publishes a Climate Transition Plan later this year.

Speaking on a conference call with journalists this morning group chief executive Chris O’Shea said: “We will look to become net zero ourselves by 2045 but if we can beat that, rest assured we will.

“The energy transition is very important for the planet, it’s a huge business opportunity for Centrica. We are incredibly well-placed to facilitate this to help our customers. You see today with the announcement and I know our chairman feels passionate about this, it’s also really important that we lead by example, we show our customers what is possible and that is what we are doing just now.”

Simplifying and modernising

The results released today are the first full-year results since the company announced its major restructure last summer, following the appointment of Chris O’Shea as group chief executive.

As part of its aims to “simplify and modernise” the group the company is updating its employee terms and conditions and continues to be involved in an ongoing dispute with GMB Union over the changes.

Responding to the results O’Shea said: “We have made a good start to the turnaround of Centrica, with the sale of Direct Energy now complete and our significant group restructure on track.

“However, our journey to transform has only just started, as we seek to restore shareholder value by improving customer experience, retention and employee engagement, while maintaining a strong balance sheet. It won’t be easy, but I am confident we have the people, the brands and the market positions to deliver a successful turnaround in the coming years.”