This article is from the source 'independent' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.independent.co.uk/news/business/news/british-gas-hit-by-warm-weather-as-profits-decline-9639179.html

The article has changed 4 times. There is an RSS feed of changes available.

Version 0 Version 1
British Gas hit by warm weather as profits decline Centrica hits out at regulator as profits dive on warm weather
(about 4 hours later)
Centrica-owned British Gas today reported profits fell by a quarter in the first half of the year as the warm weather hit the company's performance. Centrica, the owner of British Gas,lashed out at regulator Ofgem today after it revealed pre-tax profits fell by 40 per cent to £890 million in the first half.
The group said operating profit for the period was 26% lower than last year at £265 million at its UK residential energy supply arm as earnings were dented by the mild weather. Ahead of the Competition and Markets Authority probe into the energy industry, Ofgem claimed the Big Six are set to double their profit margins over the next year to 8 per cent.
It said profit margins from the business would be lower for the year, despite new figures from regulator Ofgem suggesting that suppliers were making an increasing amount of money from the typical household, up to £106 for the coming year. But Nick Luff, Centrica’s finance director who is leaving next month after seven years in the job, said: “Ofgem do some theoretical calculations with a range of assumptions. You don’t have to do much to be quite wrong when you get to the bottom of page.
Adjusted operating profit for the wider Centrica group was also hit in the first half, falling 35 per cent to £1.03 billion. “Ofgem’s figures for the last 12 months haven’t come true, and it’s very hard to see how their numbers for the future could be correct.
Chief executive Sam Laidlaw said: "With challenging trading conditions on both sides of the Atlantic in the first half, earnings will be lower in 2014 than in 2013. “There are 25 independent analysts covering Centrica and not a single one is forecasting British Gas profit margins will go up. Ofgem’s figures are unhelpful.”
"However, the group is well positioned to return to growth in 2015." British Gas’s operating profit rose by 20 per cent to £455 million in the half year. Centrica today said it expects average bills to fall by some 7 per cent, or £90, this year, but that is due to lower usage thanks to the warmer weather and energy efficiency measures, rather than lower prices.
Earlier this week, Centrica announced the appointment of Iain Conn, currently BP's head of refining and marketing, as its new chief executive. It lost 200,000 customers during the first half of the year.
Conn will take over from current boss Sam Laidlaw, who will retire from the board, at the start of next year. The political storm over energy prices continues, but Luff defended Centrica’s profit, saying: “If you’re a big business doing things at a huge scale, the numbers obviously add up.
He will be paid a basic salary of £925,000, with bonuses depending on hitting performance targets. “Yes, the business generated  £550 million of [post-tax] profit in first half, but that was on £15.7 billion of revenue.”
Additional reporting by PA Luff is part of a management exodus at Centrica: British Gas boss Phil Bentley quit last year and chief executive Sam Laidlaw is also departing, to be replaced by BP’s Iain Conn.
But Luff claimed the political backlash against Centrica had not influenced his decision to take the same role at publisher Reed Elsevier.
“It goes with the territory. What the company does is very important. Energy used to be cheap. Now it’s not.
“That’s because we used to be self sufficient in gas, but are no longer. We have to compete in an international market.”
Asked if he would return to Centrica to run the business in the future, Luff said: “I think that’s pretty unlikely.”