Centrica maintains gloomy forecast, acknowledges UK political risk

British Gas owner Centrica maintained its previous forecast issued in February as UK political risk and a rocky global commodities market continue to hound the company.

In a trading update to the London Stock Exchange on Monday, Centrica said: “The group continued to trade in line with the guidance provided at the time of its 2014 preliminary results in February, with improved year-on-year profitability downstream expected to be more than offset by the impact of lower commodity prices on the upstream business.”

Back on 19 February, Centrica filed a full-year net loss of £1bn, and cut its dividend by 30%. The company expects capital expenditure to drop to £800m over the current fiscal year and £650 in 2016; a decline of just under 40% on an annualised basis versus 2014 levels.

Centrica acknowledged ongoing political risk against the performance of British Gas, with an uncertain outcome of the UK General Election on 7 May and a possible impact it might have on the utilities market which is already facing a probe on anti-competitive practices and curbs promised by various political parties.

However, Centrica said that it had implemented plans to improve its position in the year to date with "progressed capital expenditure and cost reduction programmes against a continued low commodity price backdrop."

It is also undergoing a group-wide strategic review details of which would be published in July. In the year to date, it had strengthened its balance sheet by issuing £1bn in securities, and recently appointed Mark Hodges as managing director of British Gas with effect from 1 June, at which time he will also join the Centrica board.