Cold weather means red hot profits for British Gas owner Centrica

British Gas has cashed in on a particularly cold winter with an 11% rise in profits in its residential energy arm for 2012.

by Michael Northcott
Last Updated: 19 Aug 2013

When a winter goes on for as long as this, and with such chilly nights, it is no surprise that a gas company comes up smelling of…er…profits. British Gas has today announced that profits from its residential energy supply business have jumped 11% to £606m compared with the year before, thanks to gas consumption in homes across the UK rising by 12%. This means that parent company Centrica has been able to report operating profit of £2.7bn for last year, up a massive 14% compared with the year before. 

So it’s all tickety-boo, right? Well, not if you believe Centrica’s chief executive Sam Laidlaw, who said that profits margins per household were actually down, year-on-year, and that the company had made just £50 profit per household in the 12-month period. He said: ‘A 5% margin on the business is the sort of margin we require’ I order to be able to invest in its energy production assets. 

What Laidlaw is essentially saying, although with Westminster-esque smoke and mirrors, is that in order to be able to fund a 6% rise in dividends to shareholders and also return £500m to them in a one-off, and then still have any money to be able to invest, it needs to make a bigger margin from its customers. Yes, those stats are correct, and yes, that is a large part of the reason that people’s bills rose 6% in October last year. Harrumph.

At the same time as announcing its impressive profit growth, British Gas also announced that boss Phil Bentley is stepping down to chase his dream of being a chief executive somewhere, although it’s not clear where he wants to go. So any other large utility firms who might be in need of his services, you know who to get in touch with…

All of the six main energy suppliers in the UK raised their prices this winter, prompting the government to talk about forcing them to make customers aware of the cheapest tariff arrangement available to them. But investing the right money to make gas cheaper will be ever trickier as wholesale prices rise and hungry foreign investors continue to demand dividends…

All of the six main energy suppliers in the UK raised their prices this winter, prompting the government to talk about forcing them to make customers aware of the cheapest tariff arrangement available to them. But investing the right money to make gas cheaper will be ever trickier as wholesale prices rise and hungry foreign investors continue to demand dividends…

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