The parent company of British Gas has reported massive losses fore the period covering 2019. Centrica reported losses totalling £849 million in the year ending December 31st. It is an enormous turnaround considering the previous year-long period saw profits of £987 million.
Share prices in Centrica have also tumbled by up to 15% in response to the news. The company has blamed the energy price cap combined with falling gas prices.
Multiple Reasons for British Gas Losses
Centrica’s Chief Executive, Iain Conn, spoke the BBC Today programme, saying: “It is true that 2019 was going to be a difficult year, with the first year of the implementation of the price cap, and it did hit us by £300m. But we also had the falling price of gas, which affected our North Sea businesses, which we’re selling.”
Another costly issue cited by Centrica were the power outages at two nuclear plants. This particularly hurt Centrica’s profit margins as they own a 20% stake in Britain’s nuclear power stations.
Adding to these issues is the fact that more customers are moving away from the traditional Big Six suppliers. British Gas’ market share has dropped from 25% in 2012 to 19% last year, according to Ofgem’s market share data.
The co-founder of Energyhelpline, Mark Todd, said: “British Gas is really struggling with the onslaught from small suppliers, the price cap, and falling natural gas prices hitting them hard.”
Centrica ‘Running Out of Gas’, Says Expert
A partner at the UK’s largest professional services consultancy, Begbies Traynor, explained why British Gas was failing. Julie Palmer said: “These latest results suggest Centrica is running out of gas, with the government’s price cap on energy bills, strong competition from start-ups and the search for a new chief executive hampering the firm’s performance.
“The energy supplier has had to cut tariffs for millions of its customers, leading to thousands of job losses as the company aims to reduce costs and improve its profitability.”
Ms Palmer also indicated that Centrica’s fossil fuel businesses would need to be reshaped for them to recover fully.
Centrica Chief to Step Down
The British Gas owner’s latest losses are not entirely surprising due to the firm’s poor recent performance. Iain Conn even announced his intention to step down from his Chief Executive role last summer.
His retirement announcement came as Centrica reported pre-tax losses of £446m in the six months up to June of 2019. This is compared unfavourably with the £704m profit for the same period during 2018.
Mr Conn has previously shown defiance in the face of poor performances, saying last year that: “We grew consumer accounts in the first half of the year  in the UK. We did lose 178,000 energy accounts, but we more than made up for it in the accounts in the other businesses.”
Mr Conn added: “We are bundling energy with services and we make money out of both. It’s early days, but I’m very encouraged by what’s happened in the first half of the year.”
Last year saw a new record number of customers switching their supplier to one with a more favourable tariff. Energy experts have also been keen to encourage customers to shop around for the best deals.
If you want to learn more about the many different energy suppliers and tariffs that can benefit your business, contact Business Save and their team of highly experienced energy experts.