North Sea operator Centrica says it will continue to look to sell off its non-core operations in the region after warning the city it would fail to meet profits expectations.
The British Gas owner, which operates the Greater Kittiwake, Chestnut and Trees oil fields and a host of gas fields in the North Sea, said in an interim management statement it planned to continue to invest in the region.
However, it warned that with rising costs for the North Sea, it would continue the sell-off programme that saw a £175million disposal already take place this year.
“This is in line with our strategy to optimise our North Sea portfolio, investing selectively in assets around our existing hubs while managing costs, and looking to divest non-core assets,” the company said.
The weaker-than-expected update came as the company said it had been forced into hiking bills for millions of households in order to offset losses in its residential arm.
The firm said overall group earnings, which had been expected to rise by 3% to 4%, were now likely to remain flat on the £2.7 billion reported in 2012 after being affected by challenging conditions in its business supply arm across the UK and United States. Shares fell 3%.
Centrica said it absorbed rising costs in its British Gas residential business “for as long as possible”, but last month moved to increase electricity and gas prices by 10.4% and 8.4% respectively from November 23 after the division was loss-making for a number of months.
It said profit margins in the residential business would largely hold firm, edging only slightly lower to just under 5%.
The “big six” supplier became the latest energy group to signal it would undo some of its imminent price rise by promising to pass on an expected cut in government green levies “in full” to customers.
Nick Luff, group finance director, said: “If there are any changes to the environmental programme that means it reduces our costs then we will pass that benefit back to our customers in full as quickly as possible.”
Centrica said British Gas Business was set to see full year profits drop “significantly” on 2012, while margin pressures were hitting its North American energy supply division, particularly in power sales to firms.
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