British Gas profits down as Centrica hit by UK warmer weather and US polar vortex

Lynsey Barber
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British Gas profits down (Source: Reuters)

Pre-tax profits at British Gas owner Centrica fell 40 per cent in the first half of the year as British Gas felt the effects of warmer weather in the UK.

British Gas operating profit dropped 26 per cent as gas consumption fell 24 per cent and electricity use dropped nine per cent.

Customer numbers at the energy provider also dipped one per cent in the first quarter which it said reflected high levels of customer switching and a hike in energy prices last November, but numbers began to stabilise in the second quarter.

Centrica wrote off £65m as a result of the extreme polar vortex weather conditions in the US and £40m in relation to cancelled wind farms.

The energy company expects a return to profit next year on the back of improving margins, less extreme weather conditions in the US, cost reductions and a growth in UK customers.

It said customer bills were expected to fall by around £90, down seven per cent on last year, with profit per household expected to drop 40 per cent this year to £40.

Outgoing chief executive Sam Laidlaw said: “The investments we have made mean that the business is balanced and more resilient, both upstream and downstream.

“The combination of mild weather, and our expectation that we will not change energy prices this year, means the average actual British Gas household energy bill is expected to be around £90 lower in 2014 than in 2013.”

Centrica’s share price dipped slightly on the news, opening 1.4 per cent this morning, but quickly recovered to remain largely flat on yesterday’s closing price as profits were in line with expectation.

The fall in profits comes as British Gas and the rest of the big six energy providers prepare to battle the industry regulator Ofgem over profit estimate disparities.

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