Centrica shares tumble after customer flight in second half

Shares in Centrica, the parent company of British Gas, fell as much as 17% and were on track for their worst ever single-session performance on Thursday after a disappointing trading update.

The company, which said it was enduring "highly competitive" trading conditions, also admitted to a "disappointing" second-half performance in its business energy supply division.

Earnings warning

Centrica also warned that its full-year earnings per share at 12.5p would be lower than market expectations due to a 0.8p impact from a one-off North American tax charge and reflecting a weaker performance at its UK business unit as well as warmer than expected weather in October and November.

Britain's biggest energy supplier lost 823,000 domestic customers between June and October - coinciding with its decision to increase its standard energy tariff by 12.5%.

The company said "collective switch" deals, in which large numbers of customers sign up to less expensive suppliers, had been responsible for much of the customer losses.

Market reaction

Helal Miah, investment research analyst at The Share Centre, said: “Without any significant improvements in operating performance and earnings, we feel that management will have to cave in and cut the dividend in the near future. 

"Moreover, with the government and regulators constantly looking over their shoulder combined with the threat of price caps on energy tariffs, our confidence in the share price has been sapped further."

By mid morning in London, shares in Centrica were down 15.48% at 138p. The shares are now down nearly 70% since the start of the year.