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Centrica and E.On both lament ‘challenging’ UK retail market amidst transformations

Image: Centrica.

Image: Centrica.

Centrica and E.On, two of the UK’s largest energy retailers, have lamented the challenging UK retail market in trading updates issued this morning.

Centrica, whose chief executive Iain Conn is coming under increasing pressure, today confirmed that while its operational performance has been largely in line with expectations, a trading environment already made difficult by Ofgem’s price cap exacerbated by warmer than normal weather and falling natural gas prices in the country.

Extended outages to its Dungeness B and Hunterston B nuclear power stations only served to worsen Centrica’s position over the first three months of the year.

Centrica revealed it had lost more than 230,000 customer accounts in the UK in the first three months of the year, a matter only partially offset by growth in the connected home division Centrica has plugged for future growth.

Conn said Centrica’s response would be to “focus on those things we can control”, adding that the firm would maintain its 2019 cash flow and net debt targets.

Centrica’s share price dipped more than 8% last week to 96.2, continuing a decline that started in earnest in February of this year.

Also issuing a trading update today was E.On, and the German energy giant reported similar woes in the UK. It said that regulatory price caps and a decline in power sales resulted in a €200 million (£172 million) fall in sales over the first three months of 2019.

Indeed, while renewables sales in total were up 19% year-on-year at €478 million, they had been adversely affected by poor wind conditions and a decline in the UK’s wholesale energy price.

Ongoing transformations

E.On meanwhile also noted that its asset swap with RWE and merger with innogy continues to gain traction. Its renewables division will subsequently change hands and become RWE’s, while E.On will fulfil a long-stated pivot towards customer-facing businesses and networks.

Both E.On’s energy networks and customer solutions businesses reported stable growth of 3% and 4% respectively over the first three months of the year.

E.On also updated on its plan to swell its supervisory board to a membership of 20 until the 2023 shareholders meeting, with three additional members due to be appointed from innogy at next year’s meeting.

Centrica, meanwhile, continues to undergo something of a transition of its own, having already confirmed its intent to dispose of its interests in nuclear power. The company is to provide an update on these plans at its 2019 interim results publication at the end of July, during which it also expects to have “additional clarity” on its position in the UK retail market.

Its distributed energy and power and connected home divisions, two areas Centrica expects to grow strongly in the coming years, meanwhile have started the year strongly. The former’s revenue was revealed to be up 54% in the first four months of 2019, while the latter’s top line is up some 70% year-on-year.

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