British Gas parent Centrica added fuel to the flames over record price rises yesterday after announcing a £144.6million dividend payout for its shareholders.
The 16% jump in the dividend came as the group posted better-than-expected half-year profits of £992million – a day after hitting millions of customers with a record 35% jump in gas bills.
Chief executive Sam Laidlaw defended the dividend as a “purely mechanical” payout based on the company’s strong performance during the previous year.
But the move comes as the average dual fuel customer’s annual bills have gone up more than £400 to £1,317 since the start of the year – and sparked anger from consumer watchdogs.
Energywatch campaigns director Adam Scorer said households would be “staggered” at Centrica’s profits, adding: “Customers will be outraged to learn that while they ponder how to make ends meet, Centrica’s shareholders are enjoying an increase in their dividends.”
Centrica is paying a dividend of 3.9p a share on more than 3.7billion shares in issue – 30% of last year’s payout after its £1.95billion profits in 2007. Mr Laidlaw said the group had to reflect shareholder interests as well as customers.
“This is a business that has got a million shareholders. A lot of pension funds and people have got their savings invested in British Gas shares and we have to look after them,” he said.
The group’s £992million profits are 19% below last year after it felt the impact of rising wholesale costs at British Gas, where profits fell 69% to £166million.
The UK’s biggest domestic energy supplier, which has 15.9million customers, has also lifted electricity prices 9% alongside its mammoth rise in gas bills.
The group said the price increases were necessary to restore “reasonable profitability” to British Gas and invest in additional gas and power assets.
But while British Gas earnings were down more than two-thirds from last year’s £533million – when Centrica waited before passing on rapidly-falling wholesale prices – the firm’s production business saw a five-fold jump in profits.
Centrica’s gas production and development operation benefited from this year’s soaring gas prices to post operating profits of £638million, compared with just £123million during the previous year
Centrica’s operating profits for the first half of the year are more than £100million ahead of the £880million expected by City forecasts.
Despite the price rises at British Gas, Centrica said it had made strides in improving the efficiency of the business in a trading environment “dominated by high wholesale energy prices”.
Energy Minister Malcolm Wicks said: “We need massive investment in new energy infrastructure, power stations.
“I’m not going to play a populist card saying profits are wrong, when I know that profits are needed to invest in energy in the future to keep our lights on.”