Profits at British Gas jump by 31% to hit £574m

18th February 2016

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Full-year profits at British Gas have jumped by 31% to hit £574m for the 12 months to end of December 2015, the energy group’s parent company Centrica has announced.

It marks a steep rise on 2014’s total of £439m.

But Centrica itself reported a 12% fall in profits to £1.46bn, on the back of lowering wholesale gas prices. However shares in the firm increased by 3%, or 6.1p, to 200.2p by 8:32 on Thursday morning, following the market update.

British Gas said that residential operating profit increased, reflecting a 5% rise in average gas consumption despite the warmest December on record, with more normal UK temperatures on average in the year compared to a mild 2014.

Just last week the group announced that it was reducing gas prices by 5.1%, after the rest of the so-called ‘big six’ energy suppliers including Npower, EDF, E.On, SSE and Scottish Power announced similar measures.

The energy sector has been under intense scrutiny in terms of dropping prices in the wake of gas prices plummeting by 57% over the past year.

The Competition and Markets Authority is currently investigating the sector and estimates that households overpaid by a massive £1.2bn a year between 2009 and 2013.

Commenting on the results Centrica chief executive Iain Conn said: “Centrica has delivered a resilient financial performance, with solid 2015 adjusted earnings despite the challenge of falling wholesale oil and gas prices. Operating cash flow has been strong, and with capital discipline this has allowed the Group to reduce net debt. In 2016 we expect operating cash flow also to be over £2bn.

“We have a clear strategy for delivering growth and returns built around the customer and I am encouraged by the progress we have made. We remain confident that our plans and underlying performance momentum will allow us to more than balance cash flows and deliver at least 3-5% per annum underlying operating cash flow growth to 2020, even in the current environment, so underpinning a progressive dividend policy.”

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