Winter weather threatens to be washout for Centrica

Published on Monday 20 February 2012 00:00

The mild weather in the final months of 2011 will see Centrica’s residential arm, which trades as Scottish Gas and British Gas, report its lowest profit in three years on Thursday.

The UK’s biggest gas supplier is expected to report a 25 per cent fall in profits to £550 million at its household energy business in 2011, as the mild weather allowed customers to turn down the central heating.

The previous year, it reported record profits of £742m just months after hiking bills by 7 per cent.

Despite the profits fall in 2011, British Gas still made about £50 profit per household per year, which will reignite anger about the recent escalation in energy bills, which has forced some to choose between heating and eating.

Two of the UK’s biggest housebuilders will reveal more strong trading over recent weeks as next month’s deadline for the end of a stamp duty holiday creates a rush of first-time buyers.

Redrow and Barratt Developments are both expected to say that the spring selling season has been buoyant as new buyers rush to take advantage of an amnesty that ends on 24 March for homes worth between £125,000 and £250,000.

Bookmaker William Hill’s recent trading will be scrutinised for signs that the UK’s weak economy is starting to hurt its performance.

The group, which is due to update the market on Friday, has reported that revenues rose 6 per cent in 2011 as it benefits from strong growth in online gaming.

Operating profits are likely to be about £274m, compared to £276.8m in the previous year, which was boosted by the World Cup.

Margins also came under pressure in the final quarter of 2011 as punters got lucky with a number of high-return bets on football games.

But while growth in 2011 has been strong, Simon Larkin, an analyst at Bank of America Merrill Lynch, fears it has tougher times ahead.

He thinks that over-the-counter revenues will come under pressure as the UK’s weak GDP growth and rising unemployment makes consumers feel like they are in a recession, while the growth in gaming through machines in its shops will slow.

Over-the-counter wagers, which grew by 3 per cent in 2011, will decline by 4 per cent in 2012-13, Larkin predicts, despite a boost from the Euro 2012 football championships.

Logged in as:

Comment here. Start typing your comment here:

Post comment

Please adhere to our Community guidelines

Your view

Please sign in to be able to comment on this story.