UK power utility Centrica expects 2020 net debt down 10%

By Nina Chestney

LONDON (Reuters) - British utility Centrica's closing net debt last year is expected to be about 2.8 billion pounds ($3.8 billion), a reduction of more than 10% on the year, the company said in a trading update on Thursday.

The company, which is scheduled to report its preliminary annual results on February 25, said that was before it included net proceeds of 2.7 billion pounds from the sale of its North American subsidiary Direct Energy.

It is expected to spend the bulk of that on reducing net debt and funding its benefit pension schemes.

The owner of British Gas said a restructuring plan it announced in June remains on track, and trading and optimisation performance continued to be strong, in particular in its liquefied natural gas business.

This week, Britain's GMB trade union said its members at British Gas will stage a second five-day strike in protest over proposed changes to work conditions.

Centrica said COVID-19 continued to impact its financial performance last year although the gross impact was lower in the second half.

UK business electricity demand was negatively impacted by around 15% in the second half, compared to around 30% in the second quarter, for example.

The company sounded a note of caution on 2021, owing to the return of tighter coronavirus restrictions in Britain and Ireland and their effect on business energy demand.

"In addition, the related uncertain economic backdrop increases the potential for additional working capital outflow and higher bad debts," it said.

($1 = 0.7337 pounds)

(Reporting by Nina Chestney; editing by David Goodman and Jason Neely)