Centrica Plc, the owner of British Gas, is boosting shareholder returns after posting a record profit last year, joining Shell Plc and BP Plc reaping the rewards of soaring energy prices.
(Bloomberg) — Centrica Plc, the owner of British Gas, is boosting shareholder returns after posting a record profit last year, joining Shell Plc and BP Plc reaping the rewards of soaring energy prices.
The company plans to expand its share buyback program by adding £300 million ($361 million) on top of a plan launched late last year, Centrica said in its earnings statement Thursday. The bumper results come just two weeks after allegations that the utility forced the installation of pre-payment meters on customers struggling to pay their bills.
After years of mediocre results, Centrica finds itself in a tricky spot despite the turnaround in financial health as it’s profiting from an energy crisis that’s brought on the worst cost-of-living crisis in the UK for decades. To shield consumers, regulator Ofgem has installed a temporary ban on prepayment meters for all suppliers.
“The profits of this firm are built on the backs of older people, young families and the disabled suffering in cold damp homes this winter,” said Simon Francis, Co-ordinator of the End Fuel Poverty Coalition. The utility “must better protect the most vulnerable and ensure everyone can benefit from increasing supplies of cheap, renewable energy.”
Windfall Profits
The government has offered some help to households with record bills as it is clawing back cash from energy producers’ windfall profits through a 45% tax on renewable and nuclear generation and an increased 35% levy on oil and gas production.
British Gas Faces Probe Amid Forced Prepayment Plan Backlash
Centrica shares surged to their highest since May 2019. They rose 5.5% to 104 pence as of 8:05 a.m. in London.
Profit surged across its divisions that include everything from trading to North Sea natural gas production and a stake in British nuclear reactors. It will also pay pay 3 pence in dividends for 2022 after reinstating payouts last summer following a Covid-related pause.
Centrica’s trading business, which includes renewable power assets under management as well as its liquefied natural gas unit, posted £1.4 billion in operating profit — compared to £70 million a year before. That even exceeded results from the company’s key cash cow, the upstream arm.
Adjusted operating profit more than tripled to £3.3 billion in 2022. Earnings per share soared more than eight-fold to record 34.9 pence, exceeding the company’s guidance made last month.
Wholesale gas prices have eased about 80% from last summer’s peak, but it will take months before households benefit from the slump. Not until July are tariffs expected to fall below the government’s energy price guarantee for the first time since it was rolled out late last year.
Read more: UK Criticized for ‘Rollercoaster’ Plans on Energy Bill Support
(Updates with shares in fifth paragraph.)
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