Gas firm profits plunge nearly one-fifth

Jul 31 2008 LDP Business

Centrica's operating profits are more than £100 million ahead of the £880 million expected by City forecasts, and the company also upped its dividend payout to shareholders from 3.35p to 3.9p - a rise of more than 16%.

Despite the price hikes at British Gas, Centrica said it had made strides in improving the efficiency of the business in a trading environment “dominated by high wholesale energy prices”.

By June this year complaints to consumer watchdog Energywatch had fallen by more than 90% from a peak in April last year when the company had problems with the introduction of a new billing system, the firm said.

The business also cut 8% of its staff over the period and is on track to make £60 million in cost savings, although yesterday’s tariff increases will overshadow the results.

British Gas said it was left with no choice - despite the pressure on households struggling to cope with surging food, petrol and mortgage costs - because of increasing global demand, diminishing UK gas reserves and record oil prices pushed up its costs.

French-owned EDF Energy became the first major energy company to lift prices last Friday - 17% for electricity and 22% for gas - blaming record oil prices for the move.

And other rivals among the UK’s “big six” are sure to follow EDF and Centrica after Scottish & Southern Energy last week said it was becoming “more difficult by the day” to resist hitting customers with higher bills.