British Gas’s profits have risen tenfold as the group recoupes money it lost during the energy crisis.
British Gas owner Centrica said profits reached £751m last year, up from £72m in 2022.
Chris O’Shea, chief executive of Centrica, said the company benefited from a “unique” boost during the first six months of the year as it capitalized on being one of several energy firms allowed to recover costs by regulator Ofgem. . .
Suppliers were forced to protect households against price increases throughout 2022, when they reached record levels following the Russian invasion of Ukraine.
This meant British Gas was forced to sell power below the wholesale price to its 7.5 million customers, hurting its balance sheet.
Momentum: Chris O’Shea (pictured), boss of British Gas parent company Centrica, hailed a strong performance over the past year.
But the changes at the end of 2022 increased the profits that suppliers could make, allowing its parent company Centrica to recover some of the costs incurred.
Centrica has suggested this increased profits by around £500m.
However, the parent company’s overall profits fell 17 per cent last year to £2.8bn.
This was above analyst estimates but below the record £3.3 billion it earned in 2022, as many British households struggled to keep up with sky-high bills.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Centrica’s turnaround appears to be almost complete, with the group making great progress over the past three years. There was a strong recovery in British Gas.’
And the FTSE 100 company, which produces and markets energy as well as selling it directly to homes, was still keen to sweeten shareholders.
Centrica plans to increase its annual dividend by a third to 4p a share, worth £144m, rewarding hundreds of thousands of retail investors.
While this helped boost Centrica shares, which rose 1.3 per cent, or 1.8p, to 136.2p, it also sparked fury among critics.
Simon Francis, of the End Fuel Poverty Coalition campaign group, said: “These profits remain astronomical for a company that provides the energy people need to stay warm and safe.”
“These huge gains are one of the reasons why households had to cut their spending so much, causing Britain to fall into recession.”
Unite general secretary Sharon Graham said: ‘Centrica continues to make staggeringly high profits thanks to exorbitant bills almost double what they were three years ago.
There’s no point in beating around the bush: the only way to stop households and businesses being ripped off by profiteers in our energy supply chain is public ownership.’
However, O’Shea noted that shareholders were likely to continue reaping benefits despite the uncertain backdrop.
“As expected, markedly lower commodity prices and lower volatility will naturally reduce earnings compared to 2023 as we return to a more normalized environment,” he said.
“Our performance over the past year has reinforced our confidence in meeting our medium-term sustainable profit ambitions and continuing to create value for shareholders.”
In a bid to soften the blow to households, it said it would also provide £40m of additional support to customers struggling with their bills.