British Gas hikes electricity prices after Centrica profits fall

British Gas has hiked its electricity prices for households by a whopping 12.5% from mid September, parent company Centrica said on Tuesday alongside half-year results that showed adjusted earnings falling 11%.

Although gas prices will be held at their current level, the average annual dual fuel bill for a typical household on standard tariff will rise by £76 to £1,120, an increase of 7.3% and the company promised to provide a credit to more than 200,000 vulnerable customers.

Centrica, which lost 377,000 energy consumers in the half, reported revenue of £14.3bn for the first half of the year, a rise of 7% that fed down to a 2% rise in earnings before interest, tax, depreciation and amortisation to £1.28bn.

Adjusted operating profits fell 4% to £816m as a reduced profit from consumer customers flattened out a higher profit from business customers, while profits were sent into the red due to the asset businesses.

Underlying profits before tax fell 7% to £630m and statutory PBT was just £81m after an exceptional charges relating to re-measurements of open commodity positions, while there was also a £268m post-tax net exceptional charge predominantly relating to an impairment of the Rough gas storage asset.

Adjusted basic earnings per share fell 16% to 8.2p.

Although adjusted operating cash flow shrank 9% due to one-off UK business working capital inflow in 2016, underlying adjusted operating cash flow was flat year on year and an interim dividend of 3.6p was declared, which represents 30% of last year's full year dividend.

Centrica, which accidentally published a price rise announcement on the Biritish Gas website on Monday afternoon, made £124m of cost efficiencies during the half and said it remained on track to deliver £250m for the full year, with net debt down 22% over 12 months to £2.9bn and on track to remain in the target range of £2.5-£3.0bn by year end.

Chief executive Ian Conn said it was a "solid" financial performance despite reduced energy demand due to warm weather and strong competitive pressures, and that the business remained on track to hit its full year targets.

"We have made further significant strategic progress, continuing to reallocate resources away from our asset businesses towards our customer-facing businesses.

"With the announced asset disposals and the creation of a new European E&P joint venture, we expect the first phase of our portfolio transformation to be complete by the end of 2017, leaving the Group well-positioned to deliver longer-term returns and growth.”