Centrica reveals more assistance for vulnerable households as it updates the market on its financial performance, predicting that the group as a whole will outperform many analysts’ expectations.
The parent company of British Gas has announced additional assistance for struggling customers while lowering profit expectations for its household supply division due to lower demand.
Centrica said: “Warmer than normal weather in October has contributed towards lower volumes and profits in British Gas Energy”.
It also pointed to “broader inflationary and economic pressures” hitting the cost base and customer numbers in British Gas Services & Solutions.
It added: “As a result, we expect adjusted operating profit in our retail division to be lower than current expectations.”
Centrica made the announcement as consumer groups and surveys report surging numbers of households leaving the heating off as temperatures drop because of record prices for gas and electricity.
While household energy bills have soared, the wider cost of living crisis is further squeezing spending power.
Inflation is running at a 40-year high of 10.1% and is tipped by the Bank of England to peak at around 11% – lower than it had initially thought.
That is largely because the government’s energy price guarantee covering wholesale prices will limit bill increases this winter.
However, it sees rising interest rates to tackle inflation resulting in the average household facing a £3,000 annual increase in their mortgage costs.
That more than outweighs any government help with energy bills.
Centrica said of British Gas: “With over 10 million customers, we are acutely aware of the difficult environment facing many people and we remain committed to doing what we can to support those who need our help most.
“Today, Centrica is announcing an additional £25m of help for our customers, taking the amount we have invested in voluntary customer support this year to £50m.
Its shares soared by up to 9% on its wider trading update, however, as it was intended to set the market straight on the group’s financial performance as a whole.
It indicated that many of the analysts who watch its performance might be making overly cautious predictions.
Centrica said group earnings per share were likely to be closer towards the 26p that the most optimistic experts expect than the 15.1p that the most pessimistic have forecast.
“Centrica has continued to deliver strong operational performance from its balanced portfolio since its interim results in July and now expects full-year adjusted earnings per share to be towards the top end of the range of more recent sell-side analyst expectations,” its statement said.
The parts of the business that generate electricity and extract gas from under the ground have performed well in recent months.
The company also announced a share buyback of around £250m.