BUMPER profits at energy providers are something of a double-edged sword. Shareholders might cheer, but populist denunciations and cries of “excess” are sure to follow. Centrica investors should ignore the scrum for now, however, and bask in the glory: this is as good as it gets. Falling wholesale prices coupled with a bitterly cold winter combined to create an uncommonly good operating environment, helping to push operating profit up 65 per cent in the first half. Management won’t be able to repeat this performance, which is likely why the share price dipped by one per cent yesterday.
That said, Centrica deserves a second look. From the outside, it might seem like a boring utility company, but underneath the archaic British Gas moniker, a transformation is taking place. Increasingly, Centrica is moving away from being a supplier and becoming a fully-fledged production and supply company, as symbolised by its £1.3bn buyout of North Sea oil producer Venture. With projected earnings growth of 10 per cent per annum and a sector-beating yield of 4.5 per cent, you could do much worse.