British Gas parent company Centrica announced a £1.3 billion operating profit for the first half of 2011 which is down 19% on the same time a year ago. British Gas domestic business operating profits fell by 54% to £270 million. However, during the same period in 2010, British Gas saw an increase in sales by 98%.
Centrica have blamed the combination of warm weather, rising wholesale gas prices and increased UK tax for the halving of pre-tax profit in the first half of the year.
Sam Laidlaw, Centrica Chief Executive said: “Global events have resulted in a steep increase in commodity prices, with UK wholesale gas prices 30% higher than last winter. In this challenging market, the resilience of our integrated business model has enabled Centrica to continue to perform well. We are focused on reducing costs and ensuring disciplined deployment of capital to maintain our competitive position and drive long-term shareholder returns.”
Despite profits falling, Centrica plans to increase the dividend to shareholders by 12%, meaning that while domestic customers face higher bills, shareholders will make more money from these profits.
Audrey Gallacher, Director of Energy at Consumer Focus, said consumer interests were being forgotten: “Centrica seem to win whether wholesale costs are high or low. Retail profits margins may have been reduced by recent increases in wholesale prices – but as they are also major gas and electricity wholesalers, they can still make healthy profits at the other end.
“The most important issue is not whether Centrica’s profits go up or down. What matters is whether the energy market works for consumers and if it does not, what can be done to make it work.”
The owner of British Gas saw pre-tax profits fall from £2bn to £1.17bn in the six months to 30 June. Earlier this month British Gas raised its domestic prices by 18% and has been fined twice by regulator Ofgem in less than a month.
Centrica shares were down 1.3%, or 4.3p, to 316p in early morning trading.