British Gas owner Centrica said it had made “good progress” in recent trading despite commodity price falls.
But the energy giant said profit margins in its UK residential arm would take a hit in the second half of the year after cutting gas prices by 5% in August, marking the second price reduction this year.
Chief executive Iain Conn, who succeeded Sam Laidlaw in January, said 2015 had been “a difficult year”, although he added he was pleased with progress on the overhaul announced in July to cut costs and boost performance.
Britain’s largest energy utility, expects to spend less than the 1.05 billion pounds it had previously envisaged, mainly due to a cut in upstream investments, the company said.
The energy firm is looking to boost its residential supply business while cutting back on oil and gas production. Affected areas include Trinidad and Tobago and Canada.
Earlier this year, a company spokesman told Energy Voice, despite the financial knuckle down, the firm would continue to be focused on the North Sea and assets in Morecambe Bay in the coming years.
Centrica, which owns Britain’s main household energy supplier British Gas, was forced to cut its dividend earlier this year as it has been hit hard by a fall in energy prices and slowing demand.
It said it was on track to deliver full-year earnings in line with expectations despite a second round of retail price cuts made in August. This year’s adjusted operating cashflow is set to exceed £2billion pounds, Centrica said, compared with £2.7billion in 2014.
Conn said: “We are seeing underlying performance improvement against a softening commodity market,”
Centrica expected its 2015 organic capital expenditure to come in slightly below its target as its spending on exploration and production, its most expensive investments, was on target to be less than £800million. This would fall below £600million in 2016, Centrica added.
After joining Centrica in January, Conn initiated a strategic review that will include £1billion worth of upstream and wind power divestments. It didn’t provide further details on Thursday.
Centrica is reducing its headcount by 6,000.
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