British Gas owner reports 40% profit rise after price hikes
Centrica has reported higher profits on cheap wholesale gas
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Thursday, 21, Feb 2008 06:55
Centrica, the parent company of British Gas, has reported a 40 per cent increase in operating profit for 2007 - one month after announcing a price hike for customers.
Operating profit is up 40 per cent over the year to £1.95 billion, the UK-based energy company said, with earnings per share up 58 per cent to 30.6p, on cheaper wholesale gas prices at the start of the year.
Low prices in the wholesale market as a result of new gas pipelines from Norway and the Netherlands drove profit growth in the first half, despite less demand from customers enjoying an unusually warm winter, Centrica said.
But the second half of the year saw a rise in energy prices, and British Gas raised its tariffs for customers last month by an average of 15 per cent.
Chairman, Roger Carr, said: "Wholesale energy prices remain extremely volatile and the high gas price at the start of 2008 has squeezed retail supply margins in the UK.
"In these circumstances retail price increases have been necessary in order to restore reasonable margins."
The company said after a low point in April, when a new billing system was introduced and many customers complained of being sent incorrect bills, the number of British Gas customers increased slightly by 0.1 per cent.
The Department for Business Enterprise & Regulatory Reform (BERR) select committee is planning to launch an inquiry into possible anti-competitive behaviour in the UK energy market.
The committee will be looking into whether the current market structure encourages sufficient competition in the retail market.