British Gas half-year profit down 26%
31 Jul 2014
British Gas has posted a profit drop for the first half of the year due to warmer weather.
According to its parent company Centrica, operating profit from residential sales was down by 26 per cent to £265 million. Operating profit at the parent company fell 35 per cent at £1.03 billion.
Centrica said the average annual British Gas customer bill would be down £90 this year, against 2013.
Regulator Ofgem had said earlier the big six energy firms would double profit margins over the next year, leading to charges by the industry that Ofgem had used inaccurate figures.
Centrica attributed the predicted downturn in bills this year due to warmer weather and energy efficiencies, rather than to any fall in residential energy prices.
The company added, that post-tax profit margins would be around 4 per cent, lower than last year and under 4.5 per cent to 5 per cent needed in order to make fresh investments in the business.
Centrica said the number of British Gas residential customer accounts declined 1 per cent in the first three months of the year before stabilising in the second quarter.
BSkyB quoted chairman Rick Haythornthwaite as saying the troubles were down to "weather and reflecting the wider political environment".
He added there had been an effort to restore customer trust in the firm.
British Gas was earlier this month forced to compensate thousands of customers for providing inaccurate savings estimates in the latest mis-selling episode to hit the sector.
Centrica CEO Sam Laidlaw expects the profit decline to be a short-term affair.
He said with challenging trading conditions on both sides of the Atlantic in the first half, earnings would be lower in 2014 than in 2013.
However, the group was well positioned to return to growth in 2015.
Ofgem said last month that it had referred the energy market to a probe by the Competition and Markets Authority and that investigation was the best way to ensure that consumers were receiving the best quality, service and prices.
The big energy providers had had to face increased scrutiny over profits, increasing prices and how their wholesale and retails firms were structured.
