Utilities firm Centrica (CNA) is guiding for 2023 profit to be at the top end of expectations after the group's one-time problem child, retail division British Gas, enjoyed strong performance.

In an update ahead of a potentially testy AGM, taking place as we published this story, Centrica noted British Gas had benefited from regulatory changes which allow it to reclaim losses from selling at capped prices.

A strong operational performance from its gas production, nuclear and gas storage assets had helped to offset lower wholesale prices. A shareholder revolt is expected against CEO Chris O'Shea's £4.5 million pay packet.

Having advanced 50% over the last 12 months, the shares had a pause for breath, trading 0.6% lower at 117.2p.

UNCERTAINTIES REMAIN

‘As always, uncertainties remain over the balance of the year including the impacts of weather, commodity prices, the economic environment, any changes to regulation or government policy, asset performance and the competitive backdrop for our energy supply businesses,’ Centrica said.

‘This results in a range of possible outcomes for the full year.’ 

AJ Bell investment director Russ Mould commented: ‘Unlike some utility suppliers, Centrica has been spared much pain during the energy crisis because it benefited from its wholesale business.

‘The company has done some things well during the period – the performance of its energy-producing assets has been good and this has made up for the easing of gas and electricity prices this year.

‘Before 2022 the British Gas operation saw significant churn amid strong competition, yet much of that competition has now exited the market, putting Centrica in an enviable position.

‘The question now is whether political and regulatory pressure will intervene to upset the apple cart.’ 

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author (Tom Sieber) and article editor (Ian Conway), own shares in AJ Bell.

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