Robin Pagnamenta
Download 'Too Hot', an exclusive Specials track from iTunes
Centrica, owner of British Gas, today revealed profits of nearly £1 billion and a £144.6 million dividend payout for its shareholders just hours after unveiling the largest energy price hike in UK history.
Centrica said group operating profits were £992 million for the first half of 2008, 20 per cent lower than the same period last year. It also announced that its investors will receive a 16 per cent increase in the dividend for the first six months to June 30.
Yesterday, Centrica unveiled huge rises in energy bills which could increase the cost of gas and electricity for some of British Gas's 10 million customers by up to 44 per cent.
The average gas bill will rise by 35 per cent while electricity will increase by 9 per cent.
The company's chief executive, Sam Laidlaw, who will receive payouts worth £46,000, defended the double-digit dividend rise as a "purely mechanical" payout based on the company's strong performance during the previous year.
Jake Ulrich, managing director at Centrica Energy, who earlier this year suggested consumers wear two jumpers instead of one to reduce their heating bill, is in line for a dividend payment of £116,000.
Mr Laidlaw claimed the steep rise in energy bills was necessary because of rising wholesale energy prices and the need to invest in new sources of low carbon energy.
“The UK is no longer self-contained from an energy perspective,” said Mr Laidlaw. “The wholesale price [of gas] has gone up by 90 per cent. If we are going to remain a viable business then this price rise is necessary.”
He rejected claims that UK consumers were now paying among the highest gas bills in the world, claiming that Europeans were being charged more, although he acknowledged that “we are catching up”.
The announcement came as another energy giant, Royal Dutch Shell, the world's second biggest oil company, reported a rise in second-quarter profits to nearly $8 billion (£4 billion), driven by the soaring price of oil, which touched a record high of $147 earlier this month.
Jeroen van der Veer, Shell's chief executive, said the results were "competitive" and that the company's strategy was "on track".
Centrica's profits will be particularly galling for UK consumers struggling to deal with soaring prices for a range of consumer goods, including food, petrol, mortgages and insurance.
The company, which has 16 million UK customers, introduced average increases yesterday of 35 per cent for gas and 9 per cent for electricity. However, it also launched a regional pricing structure for gas, which means consumers in some areas, such as London and Southern England, will be hit by a 44 per cent increase in their gas bills, with immediate effect.
Nick Luff, Centrica’s finance director, said the company was only able to source 30 per cent of its gas supplies from its own fields, including one at Morecambe Bay.
It needed to import the remainder from countries such as Norway and the Netherlands and was thus having to pay international prices for them.
The results contained a 69 per cent plunge in profits from British Gas Residential, its UK household supply business, to £166 million from £533 million in 2007.
The bulk of profits came from British Gas Services, its central heating repair and maintenance arm, and from Centrica Energy, its wholesale arm.
Centrica said its tax bill had risen to £577m, up from £411 million.
The company said it was paying up to 75 per cent on its Morecambe Bay and other gas production fields and claimed to be the second highest tax payer in the FTSE 100, at a rate of 58 per cent of group profits.
Win a luxury weekend to Newcastle and its neighbour Gateshead, find out more here
Risk, resilience and embracing new technology
Industry sectors news at a glance. Interactive heatmap, video and podcast
Discover the power of collective thinking. Submit a solution and be in with a chance to win a Media Hub Home Entertainment System
The inside track on current trends in the charity, not for profit and social enterprise sectors
Everything the Business Traveller needs to know to make a better trip
Make the most of the summer and enter our fabulous photographic competition, you could win a £5000 holiday
Corsica is an island of beauty and contrast, an ideal holiday destination
Enjoy further reading from Travel to Fashion, Business to Sport, discover more
Shortcuts to help you find sections and articles
The clever way to lease a new car is with Car leasing made simple™
2009
per month on 36-month
Personal Contract Hire (PCH)
2008
42850
Car Insurance
£24,250 - £30,346
MI5
London
£60,000
The Environment Agency
Bristol
Up to £90K
Boots
Midlands
OTE £85k
Credit Protection Association
Nationwide Opportunities
Completely London
Luxury Condo's in Manhattan with NYC views
The best new homes in Wimbledon?
Nationwide
Fabulous Cruise And Cruise & Stay Offers Including Virgin Atlantic Flights Prices Start From Only £699pp!
Last Minute Cruise And Cruise & Stay Offers. Med From £499pp, Caribbean From £699pp!
5 star quality at a 3 star price.
8 fabulous Canadian cities ...you won’t find cheaper
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper
News International associated websites: Globrix Property Search | Property Finder | Milkround
Copyright 2009 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.
What do you expect when people don't stand up for their rights, I say mass protest, we should all go on strike and protest, if millions of people headed to London's financial and political areas with placards and brought it to a standstill then maybe the so called Gov and fat cats would take note!
Jack, Glasgow, Scotland
ALL British Gas customers vote with your feet. Transfer to another supplier. I know it probably won't be much cheaper but if everyone left B.Gas wouldn't that be great. It may teach them to value customers.
TD, Cardiff, Wales
surely it is about time someone at the Times explains what happens to these "huge" profits. Shareholders will get £39 for each 1000 shares from this dividend. There has been virtually no capital growth for the past 3 years. No one is making money from gas, even the directors.
james ferguson, wellingborough, uk
They do not run the welfare system: that is the Government's responsibility. I hope windfall taxes aren't mentioned otherwise this will be another company thinking of emigrating. At least pension funds will benefit - better than unfunded state scemes which future generations have to pick up.
William, London,
Nationalise all the "Utility Co's", i.e. "Winston Churchill to the EU"! Charity begins @ "Home", if the "Proverb's are still in the "Curriculum?"
Paul, Newtown, Powys, UK
On the other hand, all of you people with private sector pensions will welcome the dividend payments into your funds and all of you people with public sector pensions will welcome the taxable profit.
Dr Robert Laundon, London, UK
"Come on guys, how can British Gas, an energy/gas provider, justify making the same amount of profit as Apple?
Daniel, London, "
The difference Daniel is i don't need an iPod to cook or keep warm. And how can you switch if they all raise their prices?
Anthony, Brum,
If you don't like the price that Centrica charges for gas then buy it from someone else. There's plenty of competition and plenty of gas.
Anyone paying the world market price of gas plus its transportation and storage costs gets as much gas as they like.
They just have to earn the money !
Pedro, Stratford,
None of this is surprising, British Gas' primary legal responsibility is to make money for their shareholders.
I just wish they'd stop expressing their 'sincere regret' and admit that their customers are a distant second in their priorities.
Owen, London, UK
Doesn't the article say that most of it's profits came from their Services arm, and that profits from supplying customers with Gas plunged 69% ?
I think readers should analyse these results more carefully before sounding off, and calling for re-nationalisation.
David Farrell, Hertford,
We have become a nation of sheep and allowed ourselves to bullied lied to,overcharged and taxed almost to death by a government with no sense of its self and greedy foreign owned companies. Time to wake up and fast.
Julie, Rochester, England
There is not enough competition in Energy Supply. Costs are being absorbed in all other areas of our economy as companies struggle to mainatain sales. It would be great if we could all just increase our prices in line with costs. Six suppliers in energy; we need more choice or greater regulation
Ralph, London, England
Lets remember that it was the Conservatives who sold off public ownership of our electricity, gas and water providers and so created companies (some now foreign owned) which make profits from our basic needs.
I will vote for any party with a manifesto to re-nationalise essential services.
Alan Organ, Coventry, England
How long are we the British public going to allow ourselves to be ripped off!! £1Bn of a profit and they claim they need to increase bills to cover investment?! Petrol prices these last months, we are being completely screwed!! Why is value of Oil determined by grossly overpaid SPECULATORS ?!?!
John, Greenock, UK
I'm sick of this!
Why arn't you reporting of how much more the goverment has made since the rise in energy prices?
Everytime oil goes up, the goverment makes more money from it's 60% tax on it?
We cant stop a private company but we can stop our goverment from exploitation!!!!!!!!!!!!!!!!!
Andrew Towell, Hartlepool, England, UK
What?! Oil price is coming down, bills going up 44%, profits soar?!
Can we please renationalise these robbing energy companies?
Vincent, London, UK
Obscene. They should be taxed to hell and back on their windfall profits. They are laughing at their customers, the taxpayer and the Government. And I suppose the fat cats at the top will also take away big (undeserved) bonuses again at the end of the year?
Stephen Edwards, Wokingham, UK
obscene
Stephen Edwards, Wokingham, UK
Wind farms anyone?
Farrukh, Woking,
There is a very serious imbalance here when profits are large and price rises are steep. It seems like robbing the individual (poor) to pay the shareholders (rich). Maybe it is about time that morals appeared on the balance sheet.
Mike, Newbury, UK
This announcement just rubs salt in the wound for consumers.
I predict that some people will by pass their electricity meters.
Our pathetic Government need to take action against this sharp practice.
Stephen Holmes, Withington , UK
Centrica, British Gas and the Energy Minister argue that the company needs to make profits in order to invest.
Isn't it time that someone suggested that almost £1 billion of profit made prior to the latest 35% increase in the price of gas is sufficient for them to be able to do so?
Robert, Hull, UK
The government are not doing anything about it because they are raking in huge tax revenues on gas and oil.
Louis, Baton Rouge, USA
This is an immoral situation, and reflects the true cost of the privatisation era. Nationalisation beckons - at least the profits would improve the national finances!
John, Colchester,
Daylight robbery!
john, shrewsbury, uk
"We are being held to ransom and the Government does nothing about it".
Jane, London
Yes but just wait until the Tories get in! They will sort out the fat cats and make sure the average person gets a better dea.....or maybe not.
Joe, London, UK
The Government is to blame for this.Taxes deterred more North Sea drilling,no new nuclear power stations have been built.The much vaunted wind turbines are years away.Planning for gas storage facilities have not been given,so Britain sells gas to Europe cheap in the summer,they sell it us back dear
Peter, Manchester, England
Many of the governemtn MPs and ministers will become executive and non-executive directors of these companies in due course. It's not in their interests to look after the man in the street.
Dave, Liverpool, England (but wish it was elsewhere)
I suggest the brits place the blame on their government. How much tax do you have on one liter of petrol??
Matt, Houston, USA
Presumably Centrica will be using their windfall profits to invest in new gasfields etc rather than loading the dividend paid to shareholders at the expense of the customers.
Bring back the days of state owned British Gas!
Stuart Hawkesworth, Leeds,
Apple Computer, high flying tech company with profits from around the world, earned £1 Billion in the last 2 quarters (Q3 $1.07 billion + Q2 $948 million and factor in foreign exchange). Come on guys, how can British Gas, an energy/gas provider, justify making the same amount of profit as Apple?
Daniel, London,
is this government ever going to intervene or are they happy for the population to be ripped off?
Mike, Sole Street, England
Simple - re-nationalise.
Such utter greed at the expense of the poorest is despicable.
Amy, Penzance,
Everyday that passes leaves me more exasperated with our current government, I blame 'New Labour' for the fact that people I know, who are able to, have either left this country or plan to in the near future, they, like me, feel betrayed.We are ripped off, in a lawless society that doesn't care.
jack , portsmouth, hampshire
Essential services are ripping this country apart and Mr Brown does nothing.
Mike, Sole Street, England
I believe that the time has come for 16 million customers to say no to British Gas and move to another supplier. If the British public would just wake up and shake themselves out of the apathetic state they've sunk into, we could send a very loud message out to these cynical fatcats,NO MORE RIP OFFS
Mick, Romsey,
So at what stage does rofit become theft?
Keith, Newcastle, England
If this government is to regain any credibility it must hit Centrica - and the other utility companies - with an immediate windfall tac charge. Longer term energy sources need to be renationalised; private firms can't be trusted.
Duncan, Glasgow,
If the cost of oil comes down, surely the cost of gas should come down!
David Kinsley, Derby, UK
Sir, These greedy goons will force nationalisation of the industry. What steps have they taken to address the lack of fuels? Any? If not, why are they allowed to remain in control, and get fat? Remember this is only the latest in a string of massive rises.
Roger Pearse, Ipswich,
One word for these large gas and oil companies: Greed!
Sarah, Toronto, Canada
It's unacceptable to be raking in such huge profits while millions are to put into fuel poverty with the latest ridiculous price hike. This is why energy should never have been privatised without far more strict controls to ensure the public doesn't get fleeced in favour of fat cat shareholders.
Carole, Portsmouth, UK
We are being held to ransom and the Government does nothing about it.
Jane, London,