Centrica raises dividend as profits fall 20%
Friday 01 August 2008
Centrica, the parent company of British Gas, which shocked customers on Wednesday when it announced price rises of up to 35 per cent, made profits of almost £1bn in the first half of the year.
The company said yesterday that profits before tax in the first half were £992m and handed shareholders a 16 per cent increase in the interim dividend.
The scale of the profits prompted anger from some consumer groups but Centrica pointed out that its performance was 20 per cent down on last year's total of £1.23bn. It also defended its higher interim dividend, which it said had increased automatically in line with a rising payout last year.
Centrica's profits fall is mostly the result of a serious decline at British Gas, which made £166m in the first half, down from £533m in the same period during 2007. While profits at the company's upstream gas production business increased, with the price of wholesale gas having doubled this year, Centrica said that the unit's tax bill had risen from £411m to £577m.
Nick Luff, Centrica's finance director, said calls for a windfall tax on energy companies were unfair. "You have to be very careful with talk of a windfall tax – we already pay tax at up to 75 per cent on our upstream businesses." Mr Luff said Centrica was currently the second highest taxpayer in the FTSE 100 index of Britain's largest companies.
The company, whose profits fell by 48 per cent in the first half, taking into account tax payments, also believes attacks on it are unfair in the context of the £1bn-a-year investment programme it is planning between now and 2020. Centrica has ambitions to become a nuclear power generator and has also promised large investments in renewable energy, as well as new gas storage facilities.
A spokesman for the consumer group Energywatch said: "Customers will be outraged... While they ponder how to make ends meet, Centrica's shareholders are enjoying an increase in dividends."
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