Centrica PLC, the parent company of British Gas, has reported a significant drop in its interim profits for the first half of 2024, as the retail arm, British Gas, saw a reduction in earnings due to declining energy prices and the absence of a one-time payment received last year.
The company’s interim adjusted operating profit stood at £1.04 billion ($1.34 billion) for the six months ending June 30, starkly down from £2.08 billion in the same period last year. This substantial decrease highlights the volatility in the energy market, which has seen a sharp reduction in wholesale energy prices following the record highs due to Russia’s invasion of Ukraine.
British Gas Energy, a crucial division of Centrica, saw its profits plummet to £159 million from £969 million in the first half of 2023. The previous year’s figures were buoyed by approximately £500 million due to adjustments in the energy price cap by regulator Ofgem, allowing the firm to recover costs lost during the energy crisis—a benefit that did not recur this year.
Chris O’Shea, CEO of Centrica, stated, “Our core businesses continued to deliver in line with our expectations in the first half of 2024, against the backdrop of more normalized market conditions.
The infrastructure segment, which includes Centrica’s interests in Spirit Energy, energy storage sites, and a 20% stake in Britain’s nuclear fleet, was the most significant contributor to the company’s profits. However, it too saw a decline, with profits falling to 522 million euros from 654 million in the first half of 2023, influenced by the lower energy prices.
Additionally, Centrica announced that its Chair, Scott Wheway, would be stepping down after a five-year tenure, with non-executive director Kevin O’Byrne set to succeed him starting December 16, 2024.
Amid these challenging times, Centrica has decided to raise its interim dividend to 1.5p from 1.33p and extend its share buyback programme by 200 million, expecting to complete it by around February 2025. This move reflects the company’s confidence in its financial health and its commitment to delivering value to shareholders despite the current industry challenges.
