Proactive Investors - Centrica PLC (LON:CNA) is expected to report a dip in full-year profit next Thursday, 15 February as the energy firm’s benefits from higher bills and rival collapses look to finally be ending.
According to analysts, the British Gas owner will report adjusted operating profit around the £2.5 million mark, down by a quarter on 2022’s bumper figure of £3.3 billion.
“The surge in profits seen in 2022, thanks to soaring energy prices and the removal of many energy supply rivals, appears to be running out of momentum,” AJ Bell analysts said.
Group revenue will likely sit flat at £33 billion meanwhile, with boss Chris O’Shea having previously said earnings would be heavily weighted toward the first half of the year.
“As with other utility stocks, the slower-than-expected rate cuts and absence of a recession could be a factor,” AJ Bell added.
“Centrica shareholders will also be taking note of lower oil and gas prices, as well as the prospect of lower energy price caps.”
This cap is set by Ofgem and determines how much suppliers, such as Centrica’s British Gas, can charge households for energy.
Having peaked at £4,279 on an annualised basis in January 2023 following the outbreak of war in Ukraine almost a year earlier, the cap has since dropped below the £2,000 mark and is expected to fall further in the coming months.
That said, Centrica has already enjoyed strong earnings on the back of heightened consumer bills this year, which have remained elevated compared to historic levels.
Centrica reaped the rewards of allowances in Ofgem’s price cap over the six months to June, which allowed firms to recoup losses seen earlier in the energy crisis by charging customers more, with its retail arm recording an 889% jump in pre-tax profit to £969 million.
Similar proposals to allow suppliers to claw back earnings have been made by Ofgem for this coming April.
However, for the time being, AJ Bell noted it may be Centrica’s other businesses which are worth keeping an eye on.
This includes “its oil and gas exploration and production operations in the North Sea, stakes in British nuclear power plants, energy trading, renewable power generation, energy storage and onsite energy generation via solar cells and heat pumps”.