Mild weather hits Centrica profits
Thursday 23 February 2012
Energy giant Centrica today said mild spring and autumn weather had fuelled a 30% slide in profits at its residential arm British Gas to £522 million last year.
The UK's biggest gas supplier, which lost 97,000 customers in 2011, said the unseasonably warm weather in spring and autumn led to a 21% drop in average household gas consumption and a 4% fall in electricity.
The slide in profits for the year to December 31 comes despite the energy supplier hiking gas and electricity bills by an average of 18% and 16% respectively in August. It has since announced a 5% cut in electricity prices in January.
Centrica, however, reported a 1% increase in adjusted operating profits to £2.41 billion as its upstream gas and oil exploration business saw profits jump 33% to £1 billion.
Some of the fall in profits in supplying gas and electricity to households has been clawed back through residential services such as boiler repairs, where profits were 10% higher at £264 million.
The upstream business smashed through the £1 billion barrier for the first time, recording a 33% increase in profits to £1.02 billion, after benefiting from higher wholesale commodity prices and a good production performance.
The company claims it has invested £1.80 for every £1 it has earned over the past five years. Its dividend for shareholders increased 8% to 15.4p a share.
Chief executive Sam Laidlaw said it had been a tough year, "both for Centrica and our customers", but that the company was still making the investments "on which Britain's energy future depends".
Adam Scorer, director of policy and external affairs at Consumer Focus, said the results showed that the energy industry is close to recession-proof.
"Healthy profits are still being made despite a big dip in consumption over our mild winter this year."
He added that consumers needed to be assured that the price they pay is continually fair, and that the competitive energy market is working in their interests.
"British Gas happens to be the most open of all the big six firms. But as long as the market is not felt to be fully transparent, consumers will continue to question every price rise, every profit statement and every explanation as to why bills are so high."
Shadow energy secretary Caroline Flint said: "People will be shocked that when millions of families are struggling with their energy bills, big energy companies like British Gas are enjoying huge profits.
"By letting the energy giants get away with this, the Government is showing it's out of touch and completely unable to stand up to powerful vested interests in the energy industry.
"Our energy market needs a complete overhaul, but David Cameron can only fiddle at the margins because he's too close to vested interests to stand up for working people. Labour will stand up for hard-pressed families and pensioners and end the rip-off.
"We will reform the energy market by making the big six energy companies sell all of their energy into a pool, allowing new companies to compete to sell it to the public. This will break the stranglehold of the big six, encourage new entrants, increase competition and drive down energy bills for families."
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