21 July 2006 - Ratings agency Standard & Poor's (S & P) said today that it had revised its outlook on UK-based energy supply and service provider Centrica PLC to negative from stable, reflecting the continuing deterioration of the group's business environment in the U.K.
At the same time, Standard & Poor's affirmed its 'A/A-1' corporate credit ratings and all debt ratings on the group.
S & P said that the ratings on Centrica continue to be underpinned by its leading positions in both gas and electricity supply in the UK; the strong cash flow generation of its upstream division, production from which is, however, declining fast; and a financial profile currently in line with the ratings. These strengths are offset by the group's exposure to commodity price volatility and intense competitive pressures in the U.K. retail market.
"The negative outlook reflects the pressures on Centrica's residential business in the UK and the challenges it faces in renewing its gas reserves and thereby maintaining its gas production," said Standard & Poor's credit analyst Hugues de La Presle. "Additional pressures on the group's business and profitability would weigh on the ratings."