The owner of Scottish Gas suffered a near-£1 billion plunge in value yesterday despite it more than quadrupling profits during 2018.
Shares in energy giant Centrica sank around 12% after it warned of an expected hit to 2019 performance from the new price cap on default tariffs.
Lower volumes in oil & gas exploration and production (E&P) and nuclear operations are also expected to put operating cash flow “under some pressure” this year.
Centrica, which lost 742,000 Scottish Gas and British Gas customers last year amid intense competition in the energy supply sector, highlighted a 12% rise in operating profits to £1.39bn.
Pre-tax profits rocketed to £575 million, from £137m the year before, against a backdrop of “volatile commodity prices, extreme weather patterns, continued competitive pressures and political and regulatory scrutiny and intervention”.
The new price cap for standard variable or other default energy tariffs – intended to protect consumers – came into force at the start of this year.
But energy regulator Ofgem has already raised the cap and millions of UK households will be worse off after the higher ceiling takes effect in April.
Britain’s “big six” energy suppliers have all raised their standard variable tariffs, with SSE the last to do so yesterday in a move affecting about 2.1 million customers who will typically see their bills rising by £117 a year.
Centrica said an “unexpected one-off impact” in the first period of the cap would cost it £70m this year.
Centrica’s chief executive Iain Conn said the 2018 financial performance was achieved “against a challenging external backdrop”.
He added: “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.
“Our focus is on performance delivery and financial discipline as we satisfy the changing needs of our customers.”
