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Centrica warns UK energy tariff cap, lower oil, gas production will hurt performance

Thursday, 21st February 2019
British Gas owner Centrica reported warned it would struggle to meet cash flow targets this year as the a cap on energy prices in the UK and lower than expected oil and gas production were expected to hurt performance.

'Our 2019 financial performance will be impacted by the UK default tariff cap and continuing lower volumes in E&P and Nuclear, meaning our 2018-20 target range for average adjusted operating cash flow is under some pressure,' the company warned.

The company outlined several headwinds to cash flow, including the 'UK energy supply default tariff cap, continued low E&P and Nuclear volumes and cash tax phasing.'

'The midpoint of our adjusted operating cash flow guidance is around £350m lower than the 2018 result, with around £100m of this reduction also expected to impact 2019 adjusted earnings,' the company said.

The warning on cash flow comes as the company reported mixed results for the year as adjusted operating profit rose, but volumes in spirit energy and nuclear were disappointing and recovery in North America Business was slower than expected.

Adjusted operating profit was up 12% to £1,392m, with higher commodity prices and strong rough gas production benefiting E&P despite disappointing volumes in spirit energy, the company said.

Adjusted operating cash flow and net debt were within the company's targeted 2018 ranges of £2.1bn-£2.3bn and £2.5bn-£3.0bn, respectively.

The company detailed a number of measures it was looking at to improve performance, including the sale of £500m worth of non-core assets in 2019.

In separate statement, the company announced the £230m sale of its Clockwork Home Services business in North America, as it seeks to drive channel and brand rationalisation across the group.

'We are taking actions to strengthen the company in 2019 and improve underlying performance in 2020, including driving cost efficiency hard and delivering further divestments, and as a result net debt levels remain underpinned,' the company said.

'We have developed material new customer-facing capabilities in both Consumer and Business, exposing Centrica to an expanding opportunity-set, with encouraging indications of stabilisation and growth potential. Our focus is on performance delivery and financial discipline as we satisfy the changing needs of our customers'.


At 9:16am: (LON:CNA) Centrica PLC share price was -15.55p at 121.65p



Story provided by StockMarketWire.com

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