British Gas sheds customers after hiking prices

Protesters place windmills made from British Gas bills during a Centrica AGM in London. The company has lost 823,000 British Gas customers since June

Protesters place windmills made from British Gas bills during a Centrica AGM in London. The company has lost 823,000 British Gas customers since June

The owner of British Gas expects full-year adjusted earnings per share of around 12.5 pence, below market consensus it said.

Britain's biggest energy provider saw the customer exodus following its move to increase electricity prices by 12.5% in September, although it said 150,000 of the accounts lost were exclusively down to market switching trends following the tariff rise.

Britain's biggest energy supplier also said that it had lost a further 823,000 British Gas customer accounts in the four months to the end of October, as fears grew over the future of the group's dividend.

Shares slumped more than 14 per cent in early trading on the news.

It now has 13.1 million customer accounts and 7.9 million customers.

Centrica, which is already facing the looming threat of a government price cap hitting profits at British Gas, said that it expected to deliver adjusted earnings per share of about 12.5p for 2017, nearly a fifth below the average of market forecasts.

Market analyst David Madden, at CMC Markets, warned Centrica's record share price crash may not be the end of its stock market troubles.

Its update comes just days after British Gas moved to scrap its standard variable tariffs (SVTs) for new customers ahead of Government plans to impose a price cap on the costly energy products.

Centrica, which owns Bord Gáis Energy here, said it expected an adjusted operating cashflow of more than £2 billion, after a result of £2.69 billion past year.

The reduced earnings forecast also reflects a one-off, non-cash charge of 46 million pounds ($61.1 million) in its North America business unit, Centrica added.

"Trading conditions continue to be highly competitive and performance delivery since mid-year within the Centrica Business energy supply businesses has been disappointing", Chief Executive Iain Conn said. The retail power book of its North America business unit faced market pressures, while improved operational performance in the United Kingdom hasn't translated in higher earnings as was expected.

Centrica said the decline in customers, between June 30 and October 31, was partly down to its decision to raise prices as much as 12.5pc in August, but blamed "collective switch, white-label fixed price and prepayment tariffs" for the bulk of switchers.

As Centrica continues its restructuring program, it said that it is on track to achieve its 2017 targets.