British energy and services conglomerate, Centrica plc has reportedly lost 8% of its market value in an early trading, an update that arises soon after it lost around 370,000 customers in its residential supply arm over the four months to October 2018.
Reportedly, the company blames its efforts to move households off the much-debated standard variable tariffs (SVT) ahead of a crackdown by the industry regulator. The impending price cap on ‘default tariffs’ has also jeopardized the planned retail supply merger among its rivals SSE and npower.
For the record, Centrica had 4.3 million households at the beginning of 2018 which has come down to 3.1 million on its SVT.
According to Financial Times, Centrica claims that it had been hit by reduced output in its oil and gas business, where its subsidiary Spirit Energy’s forecast production for 2018, fell to about 47.5m barrels of oil equivalent from around 50m in June as a result of unplanned outages and operational issues.
However, Centrica assures that despite the recent trading conditions and disruptions in its nuclear and oil & gas upstream businesses, it expects to deliver an improvement in underlying earnings. Centrica’s new customer propositions and efficient delivery will be able offset the effects of aggressive competition and tough regulation in energy supply.
Iain Conn, CEO, Centrica was quoted saying that the company is focused on driving significant improvements in delivering attractive returns and performance while re-positioning the portfolio towards the customer.
Sources claim that Centrica’s nuclear output fell due to extended inspections and outages at the Dungeness B and Hunterston B power stations, causing a 0.2TWh hit to its full year nuclear output from its forecast in June 2018.
However, Mr. Conn claims that the company’s financial performance has remained strong despite the issues and Centrica expects to hit its full year targets, with a total 2018 adjusted operating cash flow of £2.1-£2.3bn.