Centrica profits sink after "challenging" H1, guidance trimmed

31st Jul 2014 08:08

- Adjusted EPS down 29% - Full-year EPS to be 21-22p, below earlier guidance- Interim dividend raised 4%Energy group and British Gas owner Centrica reported a sharp drop in interim profits on the back of "challenging market conditions" as it lowered its earnings guidance for the full year.Adjusted operating profits sank 35% to £1.03bn in the six months to 30 June with results reflecting mild weather in the UK and extreme weather Stateside due to the Polar Vortex, with the North American business energy supply division making an operating loss.Adjusted earnings per share (EPS) fell 29% over the year to 10.5p."The first half of the year has seen challenging market conditions across the group, both as a result of the weather and reflecting the wider political environment," said chairman Rick Haythornthwaite.The company said it now expects 2014 EPS to be in the range of 21-22p, slightly below earlier guidance of 22-23p and the 26.6p recorded in 2013.It said this new guidance takes into account the £40m charge associated with writing off its Round 3 wind investment and around £65m of costs attributable to the Polar Vortex.First-half group revenue increased 15% to £15.7bn, as a 12% drop in British Gas turnover was offset by the doubling of sales in Direct Energy after the additional business energy supply revenue following the Hess Energy Marketing acquisition which completed last year."With challenging trading conditions on both sides of the Atlantic in the first half, earnings will be lower in 2014 than in 2013. However, the group is well positioned to return to growth in 2015, and the investments we have made mean that the business is balanced and more resilient, both upstream and downstream."Despite lower profits, the interim dividend was raised by 4% to 5.1p a share as the company stuck to its commitment of paying out 30% of the 2013 full-year dividend in the first half.The stock was down 0.2% at 313.5p by 08:30 on Thursday in London.BC