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.
Shares jumped as the company plans to expand its share buyback program by adding £300 million ($361 million) on top of a plan launched late last year. 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.”
State support measures currently cap the typical annual bill at £2,500, but this is set to rise to £3,000 in April. Wholesale gas prices have dropped dramatically but the government scaling back subsidies means the decrease won’t be felt by consumers until July, when bills will fall to about £2,400.
As the public backlash against the massive profits at Centrica and other utilities and energy companies intensifies, Chief Executive Officer Chris O’Shea said he’s well aware of the dilemma between balancing shareholder returns and helping customers.
“There is no easy solution to this,” he told journalists on Thursday.
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. Centrica payed about £1 billion in taxes in 2022.
British Gas Faces Probe Amid Forced Prepayment Plan Backlash
The shares surged to their highest since May 2019. They were up 4.5% to 102.95 pence as of 9:27 a.m. in London.
Profit soared across Centrica’s divisions that include everything from trading to North Sea natural gas production and a stake in British nuclear reactors. It will also pay 3 pence in dividends for 2022 after reinstating payouts last summer following a Covid-related pause.
The 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.
Total 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.
Read more: UK Criticized for ‘Rollercoaster’ Plans on Energy Bill Support
(Updates with rising energy bills in fifth paragraph.)
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