British Gas first-half profits surge, setting a new record.

Centrica, the UK's largest home energy provider, has revealed an almost 10-fold increase in first-half earnings, threatening to rekindle anger among consumers at the sector's profits at a time of high family prices.

Higher margins on gas and electricity delivered to consumers increased British Gas' earnings, the firm said on Thursday as it announced intentions to increase its dividend and prolong a share repurchase programme. British Gas has approximately 7.5 million customers.

The UK's energy regulator, Ofgem, was responsible for slightly over half of the £969 million improvement in adjusted operating profits by allowing the group to recoup expenses paid when it was unable to pass on the full increase in wholesale prices during the energy crisis.

The increase in Centrica's earnings coincides with several energy sector businesses facing the end of a profitable streak that was started by Russia's full-scale invasion of Ukraine.

Centrica's shares, which have increased by 333% since April 2020, rose 5% on Thursday after the London-listed business announced it will pay an interim dividend of 1.33p per share, an increase of 33% from the same time last year. It will also add another £450 million to its share repurchase scheme.

British Gas's strong earnings were defended by Chris O'Shea, chief executive of Centrica, who said: "To be sustainable and stable, you've got to generate a profit. This is quite significant.

British Gas's adjusted operating earnings increased dramatically, from £98 million in the first half of 2022 to £969 million in the first half of this year. In all, Centrica recorded a half-year adjusted operating profit of £2.1 billion, up from £1.3 billion in 2022.

The results of other home energy providers on Thursday matched Centrica's improvement in profitability as they too recovered costs and enjoyed greater margins on gas and electricity.

According to Ofgem, the industry's first-half numbers were a "one-off," and going ahead, "we expect profit levels to fall back significantly."

Moreover, energy-producing companies own the majority of the major residential providers in the UK. While their retail operations struggled during the oil crisis, these divisions profited from increased wholesale pricing.

O'Shea said that Centrica will invest an additional £50 million to assist needy customers, bringing its total spending on the scheme to $100 million since the program's inception in 2022.

(Sources: theguardian.com, ft.com)