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British Gas burned by customers as prices rise

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Investors in the owner of British Gas have been left feeling cold after Centrica warned its earnings would be hit by a series of woes including the loss of 823,000 domestic energy accounts.

Shares in the FTSE 100 company fell as much as 17% in early trading following the profit warning.
It represented the largest one day fall in its stock, taking its market value back to levels not seen for 14 years.
Centrica said it expected earnings per share in its current financial year to miss market expectations after a £46m writedown in its North America business and warmer-than-usual start to the winter in the northern hemisphere.
But it also cited troubles in its British Gas division, the UK’s largest domestic supplier at the top of the so-called ‘big six’.
The company said it had lost the customers since 30 June – with 150,000 accounts going since it announced a 12.5% hike in its standard variable tariff (SVT) electricity charge in September.
It left the firm with a total of 13.1 million customer accounts and 7.9 million customers though the losses marked an acceleration in domestic customer churn in recent years.
British Gas confirmed plans, just this week,to end the controversial default billing for new customers by April amid Government efforts to cap SVTs, with Prime Minister Theresa May branding them a “rip-off”.

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Centrica said cost-cutting at British Gas would help offset some of the challenges though operating profits at the division would be in line with last year’s figure.
Iain Conn, Centrica’s chief executive, 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.

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“We have also provided a broad and definitive set of proposals this week to improve the UK energy market for customers and look forward to engaging with the Government and regulator in the coming weeks.”
Neil Wilson, senior market analyst at ETX Capital, said: “Earnings guidance has been slashed with management now guiding earnings per share (EPS) at 12.5p for 2017, significantly below the 15p consensus – which was already pretty low – before today’s update.
“The stock’s fall is pretty much in line with the 16% drop in EPS guidance.”

Source: SKY