British Gas owner Centrica sees profits slump by a third amid plunging energy prices

BRITISH Gas owner Centrica has today announced its annual profits slumped by more than a third, amid plunging energy prices.

Centrica has seen their profits fall by a thirdGETTY

Centrica has seen their profits fall by a third

Overall annual profits for the energy giant fell by 35 per cent down to £1.75billion during a "very difficult year" for the firm following slumping oil and gas prices, it reported today.

Warm weather last year and customers deserting British Gas for cheaper rivals compounded its problems. 

But the cloud it brings for Centrica shareholders may have a silver lining for customers who could see household gas bills cut again this year and possible price wars. 

Ian Conn, Centrica's chief executive, suggested bills could drop until at least 2017 if the current trend of lower wholesale prices continues until then.

Global oil prices have halved since last summer as supplies increase but weak economic growth hits demand.

He said: "If prices do stay low then, as we are buying ahead, the average price we have been buying ahead will also fall and if it stays low there is the possibility of further reductions we could pass through to our customers."

British Gas announced a five per cent gas price cut in January, but Mr Conn said it was "absolutely feasible" there could be further reductions this year.

Centrica's profits from supplying homes were down 23 per cent to £439million as warmer weather last year meant each household spent around £100 less on bills than in 2013.

British Gas, the UK's biggest household energy supplier, continued to lose customers to rivals in 2014. The number of gas and electricity accounts it supplied fell by 368,000 over the year.

Mr Conn, the former BP executive who took over as Centrica boss last month, said the company would cut investments and slash costs and has launched a strategic review of the business.

Shares in Centrica tumbled eight per cent on the dividend cut and results, which were worse than analysts had expected.

The group has taken the "difficult decision" to rebase its shareholder dividend. The full-year pay-out for 2014 will be 21 per cent lower than 2013 at 13.5p.

The fall out plan includes writing down £1.4billion post-tax in the value of its North Sea and power plant assets and slashing North Sea investment by 40 per cent.

Centrica said two of its 20-year-old gas-fired power stations, Killingholme and Brigg, which are losing money, are to close. 

If it stays low there is the possibility of further reductions we could pass through to our customers.

Ian Conn, Centrica's chief executive

Mr Conn described the dividend cut for 650,000 individual shareholders as necessary, but "painful", in order to balance costs.

Consumers reacting to the news online had little sympathy and were sceptical they would benefit in the long run.

Rosemary Probert said: "They are trying to justify future price rises is my guess. Only £1.75billion profit? How can they possibly survive, poor lambs? Yes, milder weather for a period helped, but I suspect other people like us have been turning off or reducing their heating anyway because they simply can't afford it." 

Bob Forton added: "(They) have been fleecing customers for well over a decade. And now their profits are down. Or are they trying to justify increases in the near future? More competition is needed because this market is not competitive enough."

It came a day after a Competition and Markets Authority inquiry found millions of households paid up to £234 too much a year by not switching supplier.

Most of those who overpaid were stuck on major energy companies' standard variable tariffs rather than shopping around for cheaper deals.

But the analysis was from 2012 to mid-2014, before prices fell sharply.

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