Tuesday 31 July 2018
Is British Gas owner mulling over another price rise?
British Gas owner Centrica has reported a 20% fall in earnings in its residential supply arm in the first half of 2018 and hasn’t ruled out another price rise.
It adjusted operating profit stood at £430 million in the consumer division compared to the first six months last year as the cold weather led to an increase in energy use.
The company said it was also negatively impacted by the UK prepayment cap which was implemented last year and a loss of 340,000 British Gas customer accounts.
The Big Six supplier therefore raised tariffs in May, which affected around four million customers.
Parent company Centrica said: “However, energy prices have continued to rise since we announced our price rise in April and a number of competitors have since increased prices. We are keeping the movement of wholesale energy prices and their impact on our cost of supply under review.”
The Group’s total operating profits in the first half of 2018 fell 4% to £782 million.
It added cost-cutting targets were on track, which will see 1,000 jobs axed as part of its overall plans to reduce its workforce by 4,000 by 2020.
Centrica said it is reducing its exposure to the energy price cap on standard variable tariffs (SVTs) – to be introduced later this year – by encouraging customers to actively choose one of its fixed-term tariffs instead of the SVT
Group Chief Executive Iain Conn said: “In a first half in which we experienced rapidly rising commodity prices, extreme weather patterns, continued competitive pressures and ongoing political and regulatory uncertainty, Centrica demonstrated resilience from its portfolio of businesses.
“We continue to make progress on implementing our strategy. We have developed new propositions and delivery capabilities in both customer divisions and our cost efficiency programme is on track. Although we are awaiting the final outcome of regulation to impose a temporary cap on all default tariffs for residential customers in the UK, we have plans in place to manage this.”
