British Gas owner Centrica has revealed tumbling profits as it said the UK is moving to a “more normalised” gas and electricity market after two years of soaring energy prices.
The supplier saw underlying earnings in its household and business supply arm, British Gas Energy, slump to £159 million in the six months to June 30 from £969 million a year ago.
But the group said around £500 million of the fall was due to the absence this year of energy crisis allowance payments.
We’ve today published our 2024 interim financial results.
Our good performance in the first half reflects a more normalised external environment, as we energise a greener, fairer future.
Read more 👉https://t.co/9tLYwHrHxD
— Centrica plc (@centricaplc) July 25, 2024
Regulator Ofgem allowed energy suppliers to recover costs in 2023 that they had racked up during the crisis, but this has now come to an end.
The wider Centrica group reported half-year underlying earnings halving to £1.04 billion from £2.08 million a year ago and said group profitability will be “heavily weighted” to the first half.
Shares dropped by 9% in early trading on Thursday.
The company also announced that chairman Scott Wheway will step down after five years heading the board, to be replaced by senior independent director Kevin O’Byrne on December 16.
Centrica group chief executive Chris O’Shea said: “Our core businesses continued to deliver in line with our expectations in the first half of 2024, against the backdrop of more normalised market conditions.
“Against the medium-term profit objectives we set out last year, we are on track to deliver two years ahead of schedule for the majority of our businesses, and we continue to ramp up our investment programme, including in innovative technologies that will support the UK and Ireland’s net zero ambitions.”
Mr O’Shea’s pay has been in sharp focus this year after he said there was “no point” trying to justify his salary following a bumper pay deal in 2023 which saw him handed up to £8.2 million in salary and bonuses.
Centrica also announced on Thursday that it will increase investor returns further with another £200 million of share buybacks, which will take the total to £1.2 billion.
The share buyback programme is set to run until around the end of February next year.
Centrica has joined the wider energy market in benefiting from soaring energy prices over the past two years since the crisis sparked by Russia’s invasion of Ukraine.
But energy costs are now beginning to return to more normal levels, with falls in the price cap set by Ofgem.
British Gas Energy said its so-called bad debt charge eased back to £240 million from £284 million a year ago as fewer customers fell behind with repayments.
It said this was “supported by a more stable macroeconomic environment alongside lower prices, although the bad debt charge remains elevated against historic levels”.
The group also saw a 1% fall in household supply customers, to 7.48 million, as it said “price competition has started to increase”.
