British Gas profits leap from £72m to £751m in a year

Annual profits at British Gas have soared nearly tenfold after it tried to recoup costs from the energy crisis, while its parent company announced another £144m payout to shareholders.

Centrica released figures on Thursday showing that British Gas, which supplies energy to UK households and businesses, showed its profits jumped to £751m in 2023, up from £72m a year earlier.

The big increase in earnings came after the regulator, Ofgem, raised the energy price cap and allowed the company to recoup some of the costs of having to sell energy below wholesale price to its 10 million customers during the energy crisis.

Suppliers were forced to protect households from a spike in prices, which rose as a result of the Covid-19 lockdowns and Russia’s invasion of Ukraine, causing dozens of companies to fail.

The price cap rise, and subsequent increase in British Gas profits, pushed Centrica’s pre-tax profit to £6.5bn for 2023, compared with a loss of £240m a year earlier. The company’s preferred figure, which allows for bespoke adjustments, show profits fell 17% to £2.8bn for the year to December.

The chief executive, Chris O’Shea, said efforts to recoup costs supported British Gas profits only in the first half of the year, and the division took a £200m hit in the final six months of 2023.

He defended the remaining profits, which enabled Centrica to pay a final dividend worth £144m to its shareholders. “I said this before and I want to take this opportunity to say it again: to be sustainable you must make a profit. Which is super important because every consumer in the UK is paying £88 for the failure of other energy suppliers in the last few years. If more companies fail, these costs go on to customer bills.”

The final dividend brings Centrica’s one-off payouts to investors to £217m this year. Centrica said it was also voluntarily putting aside £40m to support customers, on top of the £100m spent in 2023.

Centrica’s boss also renewed calls for a “social tariff” that would allow poorer Britons to pay less for gas and electricity compared with those who are better-off, saying it was “the best thing we can do for consumers”. He did not clarify how he would like the initiative to be funded.

O’Shea added that the company’s strong performance was unlikely to last but he was confident shareholders would continue to reap rewards.

“As you would expect, sharply lower commodity prices and reduced volatility will naturally lower earnings in comparison to 2023 as we return to a more normalised environment,” he said.

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“Our performance over the past year has reinforced our confidence in delivering against our medium-term sustainable profit ambitions and continuing to create value for shareholders.”

The sharp increase in British Gas profits prompted a backlash from the union Unite, which is calling for the company to be nationalised.

“Centrica is still raking in astonishingly high profits off the back of exorbitant energy bills that are nearly double what they were three years ago, Unite’s general secretary, Sharon Graham, said.

“There is no point beating around the bush: the only way to stop households and businesses being ripped off by the profiteers in our energy supply chain is public ownership. It is an absolutely affordable option that would protect the national interest. Our politicians need to decide whose side they are on and make the right choices.”