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Last Updated: Thursday, 2 August 2007, 08:58 GMT 09:58 UK
Profits jump at British Gas firm
Gas hob
Most energy suppliers have followed British Gas and cut prices
British Gas-owner Centrica has reported a near doubling in half-year operating profits to 1.25bn.

The residential business of British Gas made a 533m profit in the six months to June, against a 143m loss in 2006.

British Gas has cut prices twice this year. However, Centrica said more cuts were unlikely in 2007, as wholesale gas prices for the coming winter are high.

Centrica also said it would be cutting a further 300 jobs across the group, on top of 1,550 cuts already announced.

Price cuts

Profits at British Gas were helped in the first half of the year by lower wholesale gas costs over the winter months.

British Gas announced its first set of price cuts for customers in February, although they did not come into effect until March.

The results in the first six months have been due to exceptional circumstances and will not be repeated in the second half
Roger Carr, Centrica chairman

The firm said the price cuts had helped to recruit 46,000 new users in the second quarter of the year, raising total customer numbers to 15.8 million.

However, Centrica chief executive Sam Laidlaw rejected criticism that British Gas could have cut prices sooner.

"We clearly had a very volatile price. We moved very quickly," he told the BBC.

"We moved in February when if you remember it was actually still snowing. And certainly we wanted to try and pass those price reductions through as soon as we possibly could."

Last year, about a million British Gas customers switched to other suppliers.

Centrica said improving customer service at British Gas remained a "top priority".

"Whilst we have some way to go, we have progressively strengthened our performance in this area."

Price volatility

While Centrica said that British Gas's performance had been "very strong" in the first half of the year, this was not expected to be repeated in the second half.

"The results in the first six months have been due to exceptional circumstances and will not be repeated in the second half," said Centrica chairman Roger Carr.

While the lower wholesale costs benefited British Gas's results, they hit Centrica's production business, with Centrica Energy's operating profits down 42% to 337m.

Centrica said that wholesale gas prices were set to climb in the months ahead.

"Wholesale gas prices for the coming winter are high and there is still uncertainty over the level of price volatility and customer demand due to unpredictable weather patterns."




SEE ALSO
Gazprom talk lifts Centrica stock
11 Jun 07 |  Business
British Gas customer numbers rise
14 May 07 |  Business
British Gas cuts its energy bills
26 Apr 07 |  Business
British Gas bottom of fuel poll
13 May 07 |  Business

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