Business

Centrica reinstates dividend as profits soar during energy crisis

British Gas owner Centrica called on the UK government to provide extra support to households hit by the energy crisis, even as it restored its dividend for the first time since 2020 and profits jumped fivefold.

Chris O’Shea, UK chief executive, warned that the UK was “facing what is set to be a tough winter” with predictions that the average annual energy bill for UK households could soar towards £4,000 early next year, and said he was asking the government to give customers more support.

Operating profits at Britain’s biggest energy retailer jumped to £1.3bn in the first six months of this year from £262m in the same period in 2021, driven by higher revenues from its oil, gas and nuclear assets. It will pay a dividend of 1p per share, for a total of £59m.

Investors asked Centrica return his dividend As O’Shea has helped restore stability to the business, helped in part by rising energy prices, since taking the helm two years ago.

But it comes at a politically challenging time for the company, which is often the target of consumer ire when bills mount. Oshia this year Waived £1.1m bonus payment But on Thursday he declined to say whether he would do the same next year.

The charity Citizens Advice warned on Thursday that it had already seen more people seeking energy help in the first half of 2022 than in all of 2019 or 2020, including “unprecedented” numbers who could not afford to fill pre-paid meters and therefore could not. Turn on the fridge or cook a meal.

O’Shea acknowledged that customers were “struggling” and called for increased action from the government, which launched a £15 billion support package for households in May, when bills were expected to rise to around £2,800, a level now well below where they were expected. to arrive.

Gas and electricity bills for the most vulnerable customers – who cannot spread the cost of winter energy use over the rest of the year – could rise by up to £500 a month in January, consultancy BFY Group warned on Wednesday.

“The numbers that are being talked about – you look at the average household income in the UK you can see it’s going to put a lot of pressure on people,” O’Shea said. The median household income in the UK is around £31,400 after tax, according to the Office for National Statistics.

“We are waiting to see if there will be more [government] intervention. We very much welcome it. We called for more support for consumers.”

O’Shea defended the company’s decision to restart the dividend, arguing that the past year had demonstrated the need for strong energy companies after the collapse of dozens of smaller UK energy suppliers.

Many of those customers were forced by the regulator to switch to larger operators such as Centrica.

He said most of the company’s shareholders were “ordinary” British citizens who bought a stake in the company when it was privatized by the Thatcher government with the famous “Tell Sid” advertising campaign in 1986.

“The source of our profits is not raising customers’ energy bills,” O’Shea said, claiming that on average they made just £6 per UK household they supplied in the first half of the year.

“The vast majority of our shareholders are Seeds. They are also struggling. I know it’s hard to see the words ‘dividend’ or ‘profits’ when people are suffering… but we pay well over £600m in tax… so a lot of that Returning to society.”

operating profits in British Gas The energy segment of the business fell by 43% to £98 million, driven mainly by the need to buy gas and electricity for new customers for whom it was unable to secure in advance.

Gas prices have soared in Europe as Russia restricted supplies to the continent following its invasion of Ukraine. They are now trading at 10 times the average level of the last decade, fueling a cost of living crisis and contributing to rising inflation as energy prices seep into all areas of the economy.

O’Shea declined to say whether Britain could face gas shortages this winter if Russia completely halted exports, saying only “we’ll have to see how the winter plays out”.

But he stressed that the company had secured additional gas volumes from Norway and was in the process of trying to restart the Rough offshore storage facility – which the company closed in 2017 – to strengthen Britain’s security of supply.

Britain is less exposed to direct Russian gas imports than mainland Europe, but can rely on pipeline shipments from Belgium and the Netherlands for around 15% of supplies on the coldest days, so shortages in Europe could have a knock-on effect.

O’Shea said discussions with the government about restarting Rough continued apace, but could not commit to having the facility ready for this winter. He said the company estimated that Rough could have saved consumers around £100 off their bills last winter if it had been active. It does not seek government support to finance the cost of restarting the facility.

“I think this could change security of supply in the UK and also lower customer bills,” O’Shea said.

At group level, adjusted earnings before interest, taxes, depreciation and amortization – including from oil and gas producing assets – increased to £1.66bn in the first six months of the year from £682m in the same period in 2021. Adjusted earnings per share, which exclude the impact of write-downs and other one-off charges, jumped to 11p from 1.7p.

Additional reporting by Delphine Strauss

Centrica reinstates dividend as profits soar during energy crisis Source link Centrica reinstates dividend as profits soar during energy crisis

Related Articles

Back to top button