Profits triple at British Gas parent company
Centrica, the company that owns British Gas, has reported record profits for the 2022 financial year.
Operating profits of £3.3bn were recorded at the company, up from £948m in 2021, and surpassing the previous highest ever yearly profit of £2.7bn, posted in 2012.
Profit at the oil and gas producer has been helped by high energy prices. Wholesale gas costs had risen to new highs in the wake of the war in Ukraine.
Supplies have been limited since Russia’s invasion and the subsequent sanctions imposed on the country.
The financial performance at British Gas was not as strong as its parent company.
Adjusted operating profit decreased to £72m in 2022 from £118m 2021 – a 39% decline.
At the same time the company had an increase in its number of residential customers. There were 7.5 million customers, up 4% from the previous year. The government estimated that its windfall tax will raise £14bn in 2023.
Payments to Centrica shareholders are to rise to 3p per share. Dividend payments of 1p per share were restored in July after a pandemic-era pause and have now been risen by 2p, upping the full-year payment.
More shares are to be bought from investors. The existing £250m share buyback programme has been expanded by an additional £300m, meaning Centrica will own 10% more of all shares currently issued.
Tax payments of £1bn were paid by Centrica during the year.
Pressure on British Gas and parent firm
As political pressure rose to tackle all time high profits, Centrica became subject to the 45% windfall tax on electricity generators.
British Gas came under intense criticism recently after an investigation revealed debt collectors working on behalf of the company forced their way into homes of vulnerable customers, including people with disabilities.
Electricity regulator Ofgem said on Wednesday that the end of forced installation of energy prepayment meters only extends until the end of March.
Addressing the issue, Centrica’s annual report said protecting vulnerable customers is a priority.
The firm has committed to donate 10% of both British Gas Energy’s and Irish operator Bord Gáis’s 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 pre-payment customers. We immediately took action to address this and are completing a thorough independent investigation,” the company said in the results.
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The boss of British Gas’ owner, Centrica, has said
But disability equality charity Scope said disabled people are facing devastating situations because they can’t afford enough energy.
“It’s obscene that energy companies continue to make massive profits,” Tom Marsland, the policy manager at the charity, said.
“Life costs a lot more when you’re disabled. We’re being inundated with heart-breaking calls from disabled people who haven’t eaten for days, who can’t afford energy to charge wheelchairs and stairlifts, but are still racking up huge energy debts.”
The record profits have also been criticised by Friends of the Environment who described Centrica as “one of the companies fuelling the energy and climate crises”.
Windfall taxes should be “tougher”, a campaigner with the group said.
“The new Energy Security and Net Zero secretary needs to step up and back growing calls for a tougher windfall tax on the excessive profits of fossil fuel companies like Centrica to help fund the investment in insulation and homegrown renewables needed to bring down bills and cut emissions,” Sana Yusuf said.
Donald Trump’s victory was secured on an unequivocal promise to stretched American households that he would “end inflation”, but markets and economists are anticipating his second term will do the opposite.
A combination of corporate tax cuts, government borrowing, lower migration and swingeing tariffs on overseas imports are all expected to heat up the American economy and stoke price rises.
Bond yields on 10-year US Treasuries, effectively the price of borrowing for the American government, were up by 3.6% overnight, rising more than 15 basis points to above 4.4% as European markets opened.
That signals investors believe that borrowing will rise, and the Federal Reserve will be forced to slow rate cuts in order to tackle inflation.
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A clearer picture will emerge on Thursday when Federal Reserve chairman Jay Powell, who Mr Trump said will not be reappointed, announces the next move on rates.
Markets still expected a 0.25 percentage point cut (a similar move to that anticipated from the Bank of England earlier in the day) but Mr Powell’s comments will be scrutinised for signals of what Trump 2.0 means for the prospect of further cuts.
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Trump wins: Demographics and key issues
But higher prices for consumers are not necessarily bad news for corporate America, with the dollar surging against sterling and the euro as swing states fell to Mr Trump, and Wall Street futures trading indicating a rally when they reopen with him confirmed as president-elect.
Shares in US banks were boosted with J.P. Morgan, Goldman Sachs and Morgan Stanley all up more than 6% in pre-market trading, along with Tesla, boosted by more than 13% as markets anticipate a dividend for Elon Musk’s campaign-trail support.
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Defence stocks were higher too and not just in the US – BAE Systems and Rolls Royce were both up – reflecting likely pressure on America’s NATO allies to make good on their commitments to increase spending.
Bitcoin was also positive in anticipation of a more benign regulatory environment from a president who used the campaign platform to launch his own cryptocurrency.
By contrast renewable holdings, the target of much of Joe Biden’s economic stimulus, were in negative territory, with wind and solar priorities likely to be replaced by a pledge to “drill baby, drill”.
Of most concern to America’s trading partners and allies will be Mr Trump’s promise to erect barriers to free trade.
The man who said tariffs “is the most beautiful word in the world” has pledged a 60% levy on Chinese imports and 10% on those from elsewhere, a deeply protectionist move that could trigger a trade war with China and the EU.
These can only increase prices in the US, with importers paying the levies at the point of entry, and other trading blocs likely to respond in kind.
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The EU has already imposed its own 35% tariff on Chinese EVs to the dismay of the continent’s carmakers the measure is intended to protect.
While these tensions play out, post-Brexit Britain, a relatively small player outside the major trading blocs, is likely to be a spectator.
Post Office campaigner Sir Alan Bates is yet to receive a reply from Sir Keir Starmer, despite writing to him over a month ago.
Sir Alan said he had written to the prime minister to remind him the “clock is still ticking” on a financial redress deadline for victims.
In his letter, he demanded a March 2025 deadline for compensation for sub-postmaster victims of the Horizon scandal.
Sir Alan confirmed to Sky News he was yet to hear back from the prime minister.
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“It was over a month ago,” he said.
“I sent him a reminder yesterday. I told him the clock is still ticking and it’s now five months from the March deadline, which I’m told is still achievable by other professionals.
“So let’s get on with it, that’s all we want. Get on with it.”
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