Profits slide hits British Gas

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The Independent Online

Centrica said today its British Gas residential arm made profits of £379 million last year.

The energy giant said the huge rise in the cost of wholesale gas had trimmed profits by 34 per cent from the previous year - when it made £571 million - but they were still well above 2006 levels, when the firm made £96 million.

Centrica said it made a total operating profit of £1.94 billion in the year to December 31 across its businesses, but a tax hike meant it paid out around £1 billion.

Centrica said British Gas residential had seen its profits slide because it passed on only part of rising energy costs to customers.

British Gas customers paid on average more than £400 extra for gas and electricity last year following two rounds of price hikes, but the division cut its standard gas tariffs by 10 per cent earlier this year in the wake of falling energy costs.

The £571 million surplus posted by British Gas in 2007 - driven by delays in passing on lower wholesale costs in the first half of the year - sparked outrage 12 months ago at a time when bills were beginning to rise.

Centrica today said the division's customer numbers had dropped almost 3 per cent from 2007 levels, to 15.6 million.

Estimated market share also slid from 46.4 per cent in 2007, to 43.5 per cent last year for the gas business.

The group said British Gas would invest a total of £34 million in 2008 and 2009 in a scheme to help those less able to pay their bills.

It said it also had 500,000 people on its Essentials tariff.

"The outlook for the global economy remains very challenging and in the UK 2009 could be particularly difficult for many of our customers, both residential and commercial," the firm said.

The group said its overall earnings were down 20 per cent at £904 million because its tax bill had risen to 53 per cent of profits, pushing its bill to above the £1 billion mark for the first time, at £1.027 billion.