Trading news from British Gas owner Centrica eyed amid energy tariff reform

The day ahead includes a trading update from British Gas owner Centrica, full year result from pubs operators Mitchells & Butlers PLC, and interims from Mothercare PLC

British Gas van
Earlier this week, Centrica announced that it is scrapping its standard variable tariff for new customers

In the midst of a planned clamp-down on energy tariffs by regulator Ofgem following price cap election pledges from the UK government, the latest third quarter trading update from British Gas owner Centrica PLC will be scrutinised closely on Thursday.

Earlier this week Centrica announced that it is scrapping its standard variable tariff (SVT) – its most popular form of tariff – for new customers as part of a range of measures it says will help reform the energy market more than the introduction of price caps.

Alongside new customers, existing customers will also be contacted and encouraged to move away from the SVT – which has come under fire for being a costly alternative to fixed-term deals.

The FTSE 100 listed said 10% of British Gas customers switched away from that particular tariff in the first half of this year, and investors will be keen to see whether such moves have helped to boost customer retention.

Back in August, the company’s last results showed statutory profit attributable to shareholders plunged by 96% to £44mln for the six months to 30 June 2017 after exceptional charge of £268mln related to oil and gas assets disposals.

Adjusted pre-tax profit, excluding this exceptional charge, fell to £639mln from £688mln.

Cost pressures key for pubs operator Mitchells & Butlers

Harvester, Toby Carvery and All Bar One pubs operators Mitchells & Butlers PLC (LON:MAB) reported full year like-for-like sales growth of 1.8% in a pre-close season trading update in September, but for the final 8 weeks of the year growth was only 0.3% , reflecting difficult trading conditions, largely due to poor weather, in August and September.

Analysts at Numis Securities expect M&B’s full year results statement on Thursday to be dominated by cost pressures, with the FTSE 250 listed firm having guided to £56mln of external cost pressures.

They expect the pubs firm’s EBIT margin to be 14.3%, a 90 basis point reduction from full year 2016, after a 100 basis point reduction in the first half.

The analysts said: “We expect most of the focus at the results to be on MAB refurbishment and conversions programme (40% complete by year end, we estimate), cost outlook and cashflow.”

They added that with sales momentum fading at the end of the year but cost inflation likely to persist they believe the risks to full year 2018 estimates remains on the downside.

Positive performance maintained by Mothercare

Little has been guided ahead of Mothercare plc’s (LON:MTC) first half results, due out on Thursday, though investors will be hoping that the child and baby focused retailer maintained a positive performance through the second quarter.

Mothercare started the first half with like-for-like sales growth, with the performance in the first three months described in July as ‘in line with expectations’.

Analysts at Numis Securities expect Mothercare’s group pretax profit to be broadly flat at the interim stage, but note a second half weighting to profitability.

Significant events expected on Thursday 23 November:

Trading update: Centrica PLC (Q3) (LON:CNA), Rotork (LON:ROR), Empiric Student Property (LON:ESP)

Finals: Mitchells & Butlers PLC (LON:MAB), Paragon Banking Group (LON:PAG)

Interims: Caledonia Investments PLC (LON:CLDN), CMC Markets (LON:CMCX), Mothercare (LON:MTC), Severn Trent (LON:SVT), Liontrust Asset Management (LON:LIO), Hogg Robinson Group (LON:HRG), First Property Group (LON:FPO), Worldwide Healthcare Trust PLC (LON:WWH)

Ex-dividends: To knock 6.9 points off FTSE 100 index (Carnival PLC (LON:CCL), DCC LC (LON:DCC), National Grid PLC (LON:NG.), Vodafone PLC (LON:VOD)

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