Energy company Centrica reported a large drop in profits yesterday amid a continuing furore over rising electricity and gas bills.
The group – whose Aberdeen-based upstream oil and gas arm employs nearly 900 people – saw pre-tax profits slump to £1.18billion in the first six months of 2011, from about £2billion a year earlier.
The firm said, however, it was still on course to deliver full-year earnings growth despite commodity price volatility, the challenging economic environment and higher UK upstream oil and tax rates.
Chief executive Sam Laidlaw said: “Global events have resulted in a steep increase in commodity prices . . . In this challenging market, the resilience of our integrated business model has enabled Centrica to continue to perform well.”
Centrica said its upstream UK business benefited from strong operational performance and higher oil prices, lifting operating profits by 9% to £531million. It expects full-year production volume of about 50million barrels of oil equivalent, subject to “the running patterns of our gas and oil fields”.
Operating profits in its downstream UK business fell 38% to £518million, with the residential energy supply operation – British/Scottish Gas – seeing a 54% year-on-year drop to £270million.
Centrica raised household fuel prices – and many tempers – by an average of 7% at the end of last year as Britain suffered its coldest winter in 100 years.
There was an even bigger backlash from consumer groups and charities just a few weeks ago, when it revealed plans to increase prices by up to one-quarter.
Scottish Gas customers will pay an average of 18% more for gas and 16% more for electricity from next month.
Centrica said group revenue for continuing operations in the first half of 2011 was slightly down on a year earlier at £11.5billion.
The firm, which nearly trebled pre-tax profits last year, added: “Whereas the 2010 financial results were heavily weighted towards the first half of the year, we expect a more even split in 2011. However, the mix of profits will show a marked shift from the downstream to the upstream, with strong growth at the operating profit level largely offset by higher taxes.”
Adjusted profits highlighted by Centrica were down by 19% at £1.3billion.
Consumer Focus Scotland said: “Consumers in Scotland will be more worried by their increasing bills than which part of an energy company makes the most money.
“Given Centrica profits remain strong, consumers are bound to question whether recent large price rises were necessary.”