Centrica PLC (LSE:CNA)’s earnings were hit by lower commodity prices in 2023, with the British Gas owner’s adjusted operating profit falling 17% year on year to £2.75 billion.
This adjusted result excludes the disposed Spirit Energy Norway assets in 2023, and the impact of unrealised hedging losses in 2022.
Retail profit rose to £800 million, driven by a return to profitability in British Gas Services & Solutions and cost recoveries in British Gas Energy.
However, profits from Optimisation and Infrastructure activities were affected by lower commodity prices and volatility, as well as the introduction of the Electricity Generator Levy in Nuclear operations.
Free cash flow stood at £2.2 billion, slightly down from £2.5 billion in the previous year, and the company ended the year with a robust balance sheet and adjusted net cash of £2.7 billion, up from £1.2 billion in 2022.
Chief executive Chris O’Shea commented: “We are pleased to report that this strong underlying operational performance has continued into early 2024.
"As you would expect, sharply lower commodity prices and reduced volatility will naturally lower earnings in comparison to 2023 as we return to a more normalised environment.
“Our performance over the past year has reinforced our confidence in delivering against our medium-term sustainable profit ambitions and continuing to create value for shareholders.”
O’Shea touted Centrica’s voluntary customer support policies: “At the start of the energy crisis we committed to contribute a material sum from British Gas Energy and Bord Gáis Energy profits to support our customers.
"Whilst we are starting to see material commodity price falls, today we have committed another £40 million, bringing the total voluntary customer support to £140 million, more than any other supplier.”
In terms of outlook, Centrica said: "In retail, we do not expect a repeat of the 2023 one-off benefits from cost recovery in British Gas Energy.
“However, the underlying performance of British Gas Energy is in line with our medium-term expectation of £150m-£250m of adjusted operating profit, and the performances of British Gas Services & Solutions and Bord Gáis in 2023 provide strong foundations to drive an improved result in both these businesses in 2024.”