FTSE 100: British Gas owner Centrica reveals profits soaring more than 900%

Close-up of flames on gas hob

British Gas's parent company Centrica (CNA.L) revealed its profits had soared almost 900% on Thursday for the first half of the year in its UK household supply arm, after a cold and expensive winter for many UK residents.

Underlying earnings at British Gas rose to £969m compared with £98m a year earlier, according to the report.

Centrica said the growth came down to the fact it had reduced debt-related costs, as opposed to it reaping a huge windfall from high energy prices following Russia's invasion of Ukraine.

As such, the profit boom appears partly due to adjustments in Ofgem's price cap on energy which allows the supplier to call in some of the costs of supplying customers during the energy crisis. Profits were overall up by £4.7bn but without adjustments, it made profit of £2.1bn.

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It announced plans to increase its dividend and extend its share buyback plan by about $450m.

The company's stock price was up more than 5% in early trade following the report.

Recent data from the Office for National Statistics shows that gas and electricity prices rose 36.2% and 17.3%, respectively in the year to June 2023, and have been one of the largest contributions to the overall inflation rate since April 2022.

Ofgem's price cap has meant that a typical household pays £2,074 a year now, almost double the pre-crisis average of £1,150.

Centrica CEO Chris O'Shea said the company is adding an extra £50m towards helping vulnerable customers, bringing the total programme to £100m since the start of last year.

Watch: British Gas profits soar by 889% (but not for the reason you might think)

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