British Gas owner Centrica has warned their 2019 financial performance will take a hit, as the energy regulator’s tariff price cap has reported a double digit increase in annual profits.
Operating profits have been adjusted and rose, £1.39bn to 12% in 2018, Centrica said this is due to higher commodity prices and strong rough gas production.
Centrica’s revenue total revenue for 2018 was £29.7bn.
Centrica has said there will be challenges throughout 2019 as cashflow will be affected, due to Ofgem’s price caps, the firm expects to take a £70m hit over the first period of the cap.
Group chief executive Iain Conn said, “Centrica’s financial performance in 2018 was mixed against a challenging external backdrop. At the headline level, adjusted operating profit was up 12% and adjusted operating cash flow and net debt were within our target ranges.
“However, volumes in Spirit Energy and nuclear were disappointing and recovery in North America business was slower than expected.
“Our 2019 financial performance will be impacted by the UK default tariff cap and continuing lower volumes in E&P (exploration and production) and nuclear, meaning our 2018-20 target range for average adjusted operating cash flow is under some pressure.”
Adding, “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.”