Business | Oil & Gas
Lower wholesale prices boost Centrica bottomline for 2007
Chief executive underscores need to invest in renewable energy.
- Agencies
- Published: 01:22 February 22, 2008
London: Britain's Centrica reported a 40 per cent rise in 2007 profit after lower wholesale gas prices improved the profitability of its domestic British Gas business, but it said margins were now tightening again.
Chief executive Sam Laidlaw said British Gas seemed to be holding on to its customers despite a 15 per cent hike in gas and electricity charges last month.
Group operating profit was $1,949 million ($3.80 billion) in 2007, compared with £1,392 million in 2006.
Several websites that specialise in helping energy customers switch suppliers accused British Gas of profiteering, but Laidlaw said he was seeing fewer customers switching to other suppliers than feared after the price hikes.
Sales
"We're seeing less volume in our call centres, and less volume on switching sites, and sales performance is holding up well," he told reporters.
Centrica shares eased 0.9 per cent to 323.75 by 0912 GMT, valuing the group at around £12 billion.
"With solid results, cost control on track and the outlook relatively unchanged, the shares could see support from the results," said Goldman Sachs analysts.
Centrica's finance director Nick Luff said that although the group had "significant headroom" on its balance sheet, its priority was not to return cash to shareholders but to invest in energy generation.
Laidlaw said "heavy investment" would be needed in renewable energy, largely offshore windfarms, and the group would also be looking at more gas-fired plants and partnerships to build new nuclear reactors.
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