Scottish Gas owner Centrica notched up a hefty loss for 2019 as the group was hit by the UK government cap on energy bills and falling prices for natural gas.
The firm said that pre-tax losses had hit £1.1 billion, compared with a £575 million profit the year before. Adjusted operating profit, which strips out major restructuring costs and some effects of the falling gas price, dropped 35 per cent to £901m.
It marked a tough set of results for outgoing chief executive Iain Conn, who was presenting his last annual accounts for the business after five years in charge.
He said Centrica had faced a “challenging environment, most significantly the implementation of the UK default tariff cap and falling natural gas prices”.
The government’s cap on energy prices came into force at the beginning of last year, promising to bring down bills for customers on default tariffs.
As he prepares to exit, Conn will take some comfort from the slowdown in British/Scottish Gas’s declining market share. The number of UK energy supply customer accounts that the company had was down by 286,000. Many customers have both electricity and gas supplied by the firm.
“That is half the decline rate of the year before, and a quarter of 2017,” Conn noted.
He also pointed to the second half of the year, which, as the firm had already signalled, was much improved on a weak first half.
Customers have been dropping away from the six biggest suppliers on the UK energy market, and experts hailed 2019 as the year that the group’s stranglehold on the market was finally broken for good.
Centrica’s rival, Perth-based SSE, saw its retail arm snapped up by one of the smaller challengers, Ovo Energy, which only entered the market a decade ago.
Ovo and other challengers spent the second half of the last decade stealing customers away from the former giants, cutting Centrica’s market share from 24 per cent when Conn took over, to 19 per cent towards the end of last year, according to figures from Ofgem.
Mark Todd, the co-founder of Energyhelpline, said: “British Gas is really struggling with the onslaught from small suppliers, the price cap, and falling natural gas prices hitting them hard.”
David Barclay, head of office at Brewin Dolphin Aberdeen, said: “[These] results cap an undoubtedly difficult year for Centrica with drops across the board. The shares rallied following December’s election, but have eased back since with weaker commodity prices undermining the short-lived change in sentiment.
“The good news is that management has identified that drastic action is required.”