View the article online at http://citywire.co.uk/money/article/a511834
British Gas reveals £270 million profit
News that British Gas' profits are down 54% in the first six months of 2011 compared with last year will come as little comfort to the 9 million customers facing hikes to household bills.
British Gas owner Centrica made £1.3 billion in operating profit during the first half of 2011. British Gas meanwhile reported a £270 million profit, down 54% on the same period last year.
The news comes as British Gas prepares to increase its gas prices by 18% and electricity prices by 16% for 9 million customers on 18 August, pushing the average annual household bill up by £190 a year.
Centrica blamed the fall in residential energy profits on higher wholesale prices, lower consumption due to warmer weather and energy efficiency improvements. Average gas usage fell by 18% and electricity by 3%, according to its interim report.
British Gas however still recruited 159,000 new residential energy customers, and its parent company said it expects to deliver further year-on-year profit growth. Centrica said while the results achieved in 2010 were heavily weighted towards the first half of the year, it expected a more even split in 2011.
Scott Byrom, energy manager at moneysupermarket.com, said the news that profits are down from the £585 million profits seen for the same period last year, will be of ‘little comfort’ to British Gas customers about to experience a serious price hike.
‘This increase will add £200 to the average cost of an annual bill – hitting wallets at a time when consumers are really feeling the pinch,’ he said.
Richard Lloyd, executive director of Which?, said: ‘Many people are struggling with rising energy costs and when they see suppliers announcing these profits they’re bound to question whether we're paying a fair price for our energy’.
‘A day after Ofgem announced it will fine British Gas £2.5 million for the way it deals with customer complaints, the big six energy suppliers should be focusing all their efforts on restoring customer trust and helping struggling consumers to manage their fuel costs,’ he added.
Shares in Centrica were down 32p to 2195p on the day, the third biggest faller on the FTSE 100.
Angelos Anastasiou, an analyst at Investec writing in a research note said: 'We continue to believe that the value is undoubtedly there, but the key for Centrica in the short term is managing the political and media storm that accompanies the making of profit in its Residential Energy Supply business'.
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