Energy surge

Centrica profits rising despite warm weather hit

Scottish Gas
Scottish Gas owned Centrica is braced for a further windfall tax

British Gas owner Centrica said it expects profits to rise this this despite earnings in its retail division being lower than expectations because of warmer than normal weather in October.

Despite the anticipated fall in profit at British Gas Energy, the company said it expects full year adjusted earnings per share to be towards the top end of the range of more recent sell side analyst expectations.

Centrica, which trades as British Gas and Scottish Gas, said it maintains a strong balance sheet, with overall levels of liquidity having increased since the half year.

It is announcing an additional £25m of help for customers, taking the amount invested in voluntary customer support this year to £50m.

The board plans a buyback programme of up to 5% of its issued share capital.

Russ Mould, investment director at AJ Bell: said: “For as long as energy companies continue to post record profit while consumers are facing soaring energy bills the debate around some form of windfall tax is not going to go away.

“However, some of the heat has been taken out of the debate by some very mild autumn temperatures – reflected in a weak showing for Centrica’s British Gas retail business.

“Centrica is both a producer and supplier of energy and it’s on the production and marketing side that it is continuing to enjoy extremely strong profit – enabling it to lift guidance and unveil a buyback.

“Centrica is concerned about the impact of some customers being unable to pay their bills and it is clearly aware of the reputational issues as it puts more money into a customer support fund. 

“It may not feel like it just now with temperatures regularly in double digits nearly halfway into November, but winter is coming and the pressures are only going to get more acute. 

“Centrica will be nervously awaiting the outcome of the Autumn Statement a week today where there may an extension of the existing windfall tax.”

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