British Gas owner Centrica increases its earnings expectations
- Credit: IAN BURT
British Gas owner Centrica upped its full-year earnings outlook and revealed it has stemmed the flow of customers quitting the business.
Centrica, which recently announced it would open a power station near King's Lynn, said it held the number of UK home energy accounts flat at around 14.3 million since its first half, which marks a turnaround after seeing almost 400,000 customers desert the group in the first six months of the year as households switched to rival suppliers.
This comes after it launched new tariffs and improved customer service, while it recently announced it was freezing its standard variable rate until at least March 2017.
Shares lifted more than 2% as Centrica said it expects higher earnings-per-share over the full year, with the group ahead of cost-cutting plans and having traded well in recent months.
Last week Centrica has confirmed plans to build a 370MW combined cycle gas turbine to reinvigorate a previously closed site at Saddlebow, near Lynn.
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It now hopes to strip out more than £300m in costs from the business over 2016, up from an original aim to save £200m as part of a wider drive to cut £750m in costs by 2020.
This is seeing the group axe jobs across its British Gas business and Irish energy arm, with more than 3,000 roles set to be cut by the end of 2016.
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Iain Conn, group chief executive of Centrica, said: 'The Centrica team has performed very well in extremely difficult circumstances.
'Looking forward we are committed to delivering high levels of customer service, a wide choice of innovative offers and products and enhancing our digital capabilities.'
Efforts by British Gas to halt its customer exodus come after the Big Six suffered amid a surge in competition from smaller rivals, which has led households to switch to cheaper deals.
Earlier this month, it became the second major supplier to freeze energy prices over winter, following the lead of SSE.
But energy experts have warned that tariff hikes of up to 10% are on the way next year as the weaker pound is set to increase wholesale energy costs.
Smaller suppliers such as Ovo and Co-operative Energy have recently had to increase tariffs, while rising wholesale costs led to the collapse of GB Energy last month.
Neil Wilson, senior market analyst at ETX Capital, said improvements in customer service are now 'paying off' for British Gas.
He added: 'It's got to hope that easier switching will come full circle in due course and mean people return.'