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British Gas owner Centrica reports record profit

Samantha Partington
Written By:
Samantha Partington

British Gas’ parent company Centrica has reported soaring profits of £3.3bn.

Centrica’s adjusted operating profit for the financial year ended 2022 rose by 250% from £948m in the previous year, helped by high energy prices due to Russia’s invasion of Ukraine.

These latest profit figures, branded ‘scandalous’ and ‘undeserved’ by one think tank, marked a new high for the group surpassing its 2012 record profit of £2.7bn posted in 2012, according to Sky News.

The group has reinstated its dividend policy, offering a full-year dividend per share of 3p up from 0p last year.

Centrica intends to extend its existing £250m share buyback programme by an additional £300m, which at the current share price would result in the group buying back 10% of its issued share capital in total.

‘Higher profits on the back of higher bills’

George Dibb, head of the Centre for Economic Justice at think tank IPPR, said: “These scandalous profits are undeserved and come directly from the pocket of billpayers. We all know that wholesale energy prices have been sky-high for the past year, but that’s no reason that gas suppliers should be making higher profits on the back of higher bills.

“These profits, which are then being transferred directly to shareholders via buybacks and dividends, are a direct transfer away from billpayers during a cost-of-living crisis. It is time to introduce a tax on share buybacks and use those revenues to support public services.”

British Gas adjusted profits, however, fell to £72m from £118m, a 39% decline on 2021. The supplier increased its customer base by 4% to 7.5 million users.

Bumper rewards from energy crisis

Russ Mould, investment director at AJ Bell, said: “Investors in the company might argue after years of disappointing returns they are due some bumper rewards. However, the fact a big driver of Centrica’s soaring earnings and cash flow is the energy crisis resulting from the war in Ukraine will sit uncomfortably with many struggling to heat their homes.

“It is fair to acknowledge that most of the company’s record profit came not from its retail-facing British Gas business but from its energy trading division as well as its oil and gas and nuclear assets, but casual observers are unlikely to make the distinction.

“Whether fair or not the argument will be made the company is taking money out of the pockets of billpayers and doling it out to shareholders.”

However, Mould added that given British Gas is the UK’s largest energy supplier, “the company also faces significant risks associated with customers being unable to pay their bills.”

Forced prepayment meter allegations

Centrica’s full year results follow The Times investigation which revealed how debt collectors working for third party company, Arvato Financial Solutions, on behalf of British Gas had forced their way into the homes of vulnerable customers to install prepayment meters. In response to the allegations, Centrica chief executive Chris O’Shea said ‘we clearly got it wrong here’.

A statement on Centrica’s final year results read: “Protecting vulnerable customers is a priority for us, and we have committed to donate 10% of both British Gas Energy and Bord Gáis adjusted operating profits to help until the current crisis is over.

“Therefore, we were extremely disappointed by the allegations surrounding one of our third-party contractors and their approach to prepayment customers. We immediately took action to address this and are completing a thorough independent investigation.”