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Profits jump at British Gas firm | Profits jump at British Gas firm |
(about 1 hour later) | |
Energy firm Centrica has reported a sharp jump in half-year profits, as losses ended at its British Gas unit. | |
Centrica made operating profits of £1.25bn in the six months to 30 June, up from £692m a year ago. | Centrica made operating profits of £1.25bn in the six months to 30 June, up from £692m a year ago. |
British Gas's residential business made profits of £533m during the period, compared with a £143m loss in 2006. | British Gas's residential business made profits of £533m during the period, compared with a £143m loss in 2006. |
British Gas has cut prices twice this year. However, Centrica said more cuts are unlikely in 2007, as wholesale gas prices for the coming winter are high. | |
Price cuts | |
Profits at British Gas were helped in the first half of the year by lower wholesale gas costs over the winter months. | |
British Gas announced its first set of price cuts for customers in February, although they did not come into effect until March. | |
The results in the first six months have been due to exceptional circumstances and will not be repeated in the second half Roger Carr, Centrica chairman See Centrica's share price | |
The firm said the price cuts had helped to recruit 46,000 new users in the second quarter of the year, raising total customer numbers to 15.8 million. | |
However, Centrica chief executive Sam Laidlaw rejected criticism that British Gas could have cut prices sooner. | |
"We clearly had a very volatile price. We moved very quickly," he told the BBC. | |
"We moved in February when if you remember it was actually still snowing. And certainly we wanted to try and pass those price reductions through as soon as we possibly could." | |
Last year, about a million British Gas customers switched to other suppliers. | Last year, about a million British Gas customers switched to other suppliers. |
Centrica said improving customer service at British Gas remained a "top priority". | |
"Whilst we have some way to go, we have progressively strengthened our performance in this area." | |
Price volatility | |
While Centrica said that British Gas's performance had been "very strong" in the first half of the year, this was not expected to be repeated in the second half. | |
"The results in the first six months have been due to exceptional circumstances and will not be repeated in the second half," said Centrica chairman Roger Carr. | "The results in the first six months have been due to exceptional circumstances and will not be repeated in the second half," said Centrica chairman Roger Carr. |
While the lower wholesale costs benefited British Gas's results, they hit Centrica's production business, with Centrica Energy's operating profits down 42% to £337m. | |
Centrica said that wholesale gas prices were set to climb in the months ahead. | Centrica said that wholesale gas prices were set to climb in the months ahead. |
"Wholesale gas prices for the coming winter are high and there is still uncertainty over the level of price volatility and customer demand due to unpredictable weather patterns." | "Wholesale gas prices for the coming winter are high and there is still uncertainty over the level of price volatility and customer demand due to unpredictable weather patterns." |