Gas firm profits plunge nearly one-fifth

Jul 31 2008 LDP Business

BRITISH Gas parent company Centrica today posted half-year profits of £992 million, a day after hitting millions of customers with a record hike in gas bills.

The operating profits are 19% below last year after the group felt the impact of rising wholesale costs at British Gas, where profits fell 69% to £166 million.

The UK’s biggest domestic energy supplier, which has 15.9 million customers, has upped gas bills by a mammoth 35%, with electricity prices up 9%.

The group said the price increases were necessary to restore “reasonable profitability” to British Gas and invest in additional gas and power assets.

But while British Gas earnings were down more than two-thirds from last year’s £533 million - when Centrica waited before passing on rapidly falling wholesale prices - the firm’s production business saw a five-fold jump in profits.

Centrica’s gas production and development operation benefited from this year’s soaring gas prices to post operating profits of £638 million, compared with just £123 million during the previous year.

Chief executive Sam Laidlaw said: “We produced a good set of results in tough market conditions and against a record first half in 2007.”