Centrica hit by high energy costs

Posted by admin on 31 July, 2008 under Business news | Be the First to Comment

British Gas owner Centrica has seen operating profits decline 20% in the first six months of the year, following increases in wholesale gas prices.

Profits fell to £992m from £1.23bn a year earlier.

Despite the drop in earnings, Centrica said it would raise its dividend to 3.9 pence a share from 3.35p.

A day earlier Centrica said British Gas would increase gas bills by 35% with immediate effect in a bid to restore “reasonable profitability”.

Centrica chief executive says prices had to rise to support a sustainable business
Centrica said the results were “good” given the tough market conditions.

The company’s shares added 1.7% in London following the earnings news.
Centrica said it was obliged to raise gas prices in light of dwindling reserves and higher oil prices that had pushed up costs.

Centrica’s move to increase prices on Wednesday came after EDF Energy raised prices last week. Analysts say other firms are likely to follow suit.

Phil Bentley, managing director of British Gas told the BBC: “The price of gas for this winter, even though it’s fallen a little bit, it’s still double what was last year”.

News reported by The BBC