Scottish Gas owner makes £992 million in six months

Published on Thursday 31 July 2008 10:48

SCOTTISH Gas owner Centrica has today unveiled profits of nearly £1 billion in the first half of the year – less than 24 hours after announcing a record gas price rise.

Its 35 per cent gas rise was criticised for potentially putting lives at risk.

And the firm followed up on yesterday's price rise announcement by today revealing that it had raked in first-half profits of 992m.

And while motorists are facing up to rises at the petrol pump, oil giant Royal Dutch Shell revealed it has racked up profits of almost 8 billion in the first six months of the year.

The Centrica profits are down 19 per cent on the same period last year and it said British Gas was feeling the impact of rising wholesale prices with profits falling by 69 per cent to 166m.

The firm, the UK's biggest domestic energy supplier, said that the price increases were necessary to restore "reasonable profitability" and invest in additional gas and power assets.

Sam Laidlaw, chief executive at Centrica, said: "We produced a good set of results in tough market conditions and against a record first half in 2007.

"Through the rest of 2008 and beyond we will continue to concentrate on improving customer service in British Gas, driving inefficiencies out of our entire business, moving in a disciplined manner towards a greater level of vertical integration and pursuing value-adding growth opportunities in all of our businesses."

Centrica's gas production and development operation benefited from this year's soaring gas prices to post operating profits of 638m, compared with just 123m during the same period in the previous year.

Despite the price hikes 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".

The business cut eight per cent of its staff over the period and is on track to make 60m in cost savings, although yesterday's tariff increases will overshadow the results.

British Gas said it was left with no choice but to raise prices – despite the pressure on households struggling to cope with surging food, petrol and mortgage costs – because of increasing global demand, diminishing UK gas reserves and record oil prices pushed up its costs.

But it was widely criticised for the move. Communities Minister Stewart Maxwell said: "The latest price hike beggars belief. It is a kick in the teeth for those already reeling from soaring energy prices."

Graham Kerr, a spokesman for Energywatch Scotland, said: "So far it has not taken the necessary steps to fight fuel poverty yet. It needs to act now."