British Gas warns of lower earnings: Profits flat as market share plunges
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Your support makes all the difference.BRITISH GAS warned of continued regulatory uncertainty and loss of market share as it announced flat first-quarter profits of pounds 966m before tax, writes Mary Fagan.
The company said its share of the industrial and commercial gas market had been 'decimated'. It called on the Government and Ofgas, the regulator, to ensure a level playing field in gas supply.
In the first three months of the year, turnover rose from pounds 3.61bn to pounds 3.68bn. Earnings per share fell from 15.1p to 14.6p.
Richard Giordano, chairman, reiterated earlier warnings that underlying earnings this year would decline. 'It is inappropriate to comment on dividend prospects before there is greater clarity on the outstanding regulatory issues,' he said.
Earlier this month, the Department of Trade and Industry and Ofgas issued a consultation document on how the domestic gas market could be opened to competition from 1996.
British Gas is concerned that there might be scope for rivals, which include electricity firms and North Sea companies, to cherry-pick the most lucrative customers.
Ofgas is also due within the next few weeks to publish a separate consultation paper on how much British Gas should be able to charge rivals to use its pipes.
Mr Giordano said: 'It is essential for the long-term profitability of British Gas that this important business should be able to earn an adequate return on its assets, which represent more than three-quarters of the assets of the company.'
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