British Gas owner Centrica’s profits soar as UK households face winter energy bill pain – business live

Published on Luglio 28, 2022

From 1h ago

Profits have soared at British Gas’s parent company too, thanks to higher revenues from its oil, gas and nuclear assets, and the surge in commodity prices.

Centrica has reported adjusted operating profits of $1.34bn for the first half of this year, up from ?262m in January-June 2021.

The increase in adjusted operating profit was primarily driven by the Upstream businesses, reflecting strong production and generation volumes and the impact of higher commodity prices.

Additionally, Energy Marketing & Trading managed the more volatile commodity price environment well and delivered higher adjusted operating profit

Centrica has reinstated its dividend, which it suspended after the Covid-19 pandemic began in 2020.

Chief executive Chris O’Shea says we are facing the most challenging energy crisis in living memory:

We’ve made significant progress de-risking the Group and building a stronger business for the benefit of all stakeholders.

This strength has allowed us to lead the industry in measures to protect and support customers through the most challenging energy crisis in living memory and the benefit of our balanced portfolio can be seen in our first half performance. We expect this to continue into the second half, underpinning continued investment in customer service and elsewhere in our portfolio.

Centrica was also boosted by asset sales, having sold Spirit Energy’s Norwegian and Statfjord UK oil and gas assets this year ( but did make a statutory loss of ?1bn due to accounting remeasurements).

Centrica insists it is “very aware” of the impact of soaring bills and wider inflationary pressures on customers, and is investing over ?100m in customer service, support and pricing over 2022.

British Gas Energy is also hiring 500 more customer service staff to handle higher call volumes from customers struggling to pay their bills.

Drinks giant Diageo is celebrating a surge in sales as hospitality firms reopened after pandemic lockdowns, and more people sampled expensive spirits.

Diageo’s net sales jumped up 21% in the year to 30 June, to almost ?15.5bn.

This growth was due to continued recovery in sale to bars and restaurance, along with “resilient demand” from consumers buying drinks in shops and off-licences despite inflationary pressures.

Diageo also raised prices by “mid-single digits”, and benefitted from a shift to pricier spirits.

Diageo makes Johnnie Walker whiskey, Don Julio tequila, Smirnoff vodka and and Captain Morgan rum. It saw strong growth in “super-premium-plus brands, particularly scotch, tequila and Chinese white spirits”.

Ivan Menezes, Diageo’s chief executive, explains:

In a year of significant global supply chain disruption, our double-digit volume growth demonstrates the tremendous agility and resourcefulness of our teams. Our net sales growth was across categories.

We benefitted from the on-trade recovery, continued global premiumisation trends, with our super-premium-plus brands up 31%, and from price increases across our regions. I am particularly proud of the performance of Johnnie Walker, which delivered double-digit growth across all regions to surpass 21 million cases globally

British medical products maker Smith+Nephew has warned that inflation is eating into its profits, sending its shares sliding 10%.

Smith+Nephew makes hip and knee replacements and advanced wound treatments.

The FTSE 100-listed company told the City that annual profit margins will fall this year, due to continued surge in inflation and supply chain challenges.

In an extremely busy morning for corporate news, Barclays has revealed a 40% slump in profits after putting aside ?1.5bn to cover a US trading blunder and potential customer loan defaults.

Pre-tax profits tumbled between April and June – from ?2.5bn a year earlier to ?1.5bn – falling short of the analysts’ consensus forecast of ?1.6bn.

The lender was knocked by a jump in conduct costs, which surged to ?1.3bn from ?143m a year earlier, after it was forced to start the process of buying back US securities that it had not been authorised to sell.

Some of that money has been put aside to deal with the potential fine expected to be levied by US regulators over the error.

Here’s the full story:

Consumer goods giant Nestl? has joined rivals such as Unilever, Reckitt Benckiser and Heinz Kraft by hiking its prices, boosting sales despite the cost of living squeeze.

The Kit-Kat-to-pet food manufacturer raised its prices by 6.5% in the first half of this year. Sales volumes grew 1.7%, as customers continued to buy products such as Purina pet food and coffee at those higher prices.

Nestl? has now lifted its sales forecasts for the year to 7-8%, from 5%, as demand for pricier branded goods holds up.

But it also saw operating profit margins dip, due to rising input costs such as more expensive ingredients.

France’s TotalEnergies has also reported record earnings, on the back of soaring crude oil and gas prices, and soaring demand for natural gas in Europe.

Second-quarter adjusted net income rose to $9.8bnfrom $3.46bn a year earlier, beating the analysts’ estimates.

TotalEnergies, like Shell, is extending its share buyback programme into the third quarte of the year, meaning investors will continue to benefit from the energy price crunch.

The National Grid is warning today that the UK energy market faces “risks and uncertainties this winter”, due to the squeeze on Europe’s gas reserves as Russia limits supplies.

But National Grid also believes the lights will stay on, as my colleague Rob Davies explains:

Coal power plants could be paid to generate more electricity, with consumers and businesses paid to use less, as the UK hunkers down for a winter of gas shortfalls across Europe caused by the standoff with Russia over the war in Ukraine.

In its early outlook forecasting Britain’s ability to keep the lights on over winter, the National Grid admitted there could be “tight periods” in early December, which would trigger a call for power plants to ramp up generation.

While the grid expects to be able to maintain the buffer that prevents blackouts, it issued a warning about the potential impact of a shortfall in Russian gas supply into Europe.

More here.

Centrica’s British Gas division has added over 200,000 customers so far this year, as the energy crisis forced some rivals went out of business.

Residential energy customers rose to 7.464m at the end of June, from 7.26m a year ago.

That includes 158,000 new accounts from Together Energy, who were switched to British Gas in January after Together collapsed.

Another 46,000 customers moved to British Gas during the period, even though the current price cap is the cheapest deal on the market (so there’s less incentive for customers to switch).

British Gas Energy has also set aside anoter ?63m to cover bad debts, recognising that more customers will struggle to pay their bills – with the price cap set to jump in October, and again in January.