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Centrica’s latest profit warning

Centrica Energy logoThere have probably been worse executive teams to sit on in the last 12 months than Centrica’s, but not many.

With a revolving door that appeared to only be working one way, outwards.

A vocal then chastised Chief Executive.

And the advent of the CMA investigation into the energy market with Centrica particularly suffering the barely veiled accusations of all and sundry.

It surely hasn’t felt the easy ride some believe life inside Centrica HQ represents.

Profit warning

Now to cap it all Centrica has issued another profit warning saying:

“Full-year adjusted earnings per share in 2014 are now expected to be in the range 19-20p, compared to a range of 21-22p at the time of our interim (half year) results”

Given that initial forecast at the interim results was itself the result of a marked down forecast this hardly counts as good news.

Whilst Centrica has tried to put a brave face on the news and promised a rosier 2015, that looks optimistic.

With gas consumption down 21% and electricity 7% and a long time falling market share, Centrica’s fundamentals are shaky.

Indeed with worsening generation capacity and a capitulating oil price, energy is one investment to remain extremely wary of.

John Musk, Analyst at RBC Capital Markets said:

“We have now lost count of the number of downgrades issued by Centrica this year. More importantly we also interpret the statement as containing a warning that growth into 2015 will not be as great as expected by the market.”

Explaining the latest warning, Centrica’s Acting Chief Finance Officer, Jeff Bell said:

“We’ve seen consistently warmer weather through the autumn than we would expect normally. By some measures it’s the warmest on record. Second, there was the problem with the nuclear spines [at Heysham & Hartlepool].”

Price freeze

Bell however alluded to the oft-quoted cause of consternation amongst the Big 6 energy suppliers, Ed Miliband’s price freeze claiming:

“If we have the opportunity to do so, [reduce prices] we will regardless of the political landscape”

Even from the depth of profit warning despair the message is clear. Leave us alone and let the market work.