Strong profits at British Gas owner Centrica sparks £250m share buyback

Strong profits are expected to spark further debate around extending the windfall tax on North Sea oil and gas operators

(PA)

British Gas’s owner Centrica is set to give more money back to shareholders after high electricity and gas prices produced better-than-expected profits.

The business said that recent figures seem to indicate that many of the analysts who watch its performance might be making overly cautious predictions.

It said that earnings per share is likely to be closer towards the 26p that the most optimistic experts expect than the 15.1p that the most pessimistic have forecast.

Centrica’s retail arm serving homes and businesses has suffered due to recent mild weather but the organisation has made up for this with “strong operational performance” in its gas production business and electricity generation. It has also done well in its marketing and trading arm.

This comes as strong profits are expected to spark debate once more around extending the windfall tax on North Sea oil and gas operators. Calls for curbing revenues of electricity generators are ongoing.

Chancellor Jeremy Hunt is expected to make an announcement around tightening the levy in the autumn statement next week.

Prime minister Rishi Sunak hoped the levy would bring in £5 billion for the Treasury when he first announced in his chancellor it back in May.

Chris O’Shea, CEO of Centrica, said in July that the business has predicted it will pay around £600 million over the next “couple of years” in windfall tax.

Last month energy giant Shell also sparked a fresh wave of calls for a stronger windfall tax after it emerged it hadn’t paid any in the UK despite gearing up to make record profits. BP predicts it will pay approximately $800 million windfall tax on its North Sea operations in 2022.

Centrica has announced it plans to buy back up to five per cent of shares after it pledged to give more cash back to investors. That amounts to around £250 million.

Its shares rose about eight per cent on Thursday, making Centrica the FTSE 100’s top riser.

The company did report that a warm October coupled with “economic pressures” hitting customers did impact its retail arm.

“As a result, we expect adjusted operating profit in our retail division to be lower than current expectations,” Centrica said in a statement.

It continued: “There are significant uncertainties that remain over the remaining two months of the year, including the impacts of weather, commodity price movements, asset performance and the potential consequences of a weak economy and high inflation on commercial performance in British Gas Services & Solutions and bad debt in our energy supply activities.”