Centrica, the UK’s largest energy supplier, has posted a total earnings loss of £144m after last year’s rise in gas prices damaged profits.
Centrica group business, British Gas Residential, saw profits drop 34 per cent, with total operating profit at £1.94bn in 2008, a 0.4 per cent loss on the previous year despite increasing prices twice last year.
Commenting on the loss, chief executive, Sam Laidlow, said: ‘In the first half of 2008 we experienced rapidly rising global oil and gas prices, only to see them fall in the second half, at the same time as the credit markets tightened greatly for all of our customers and counterparties.
‘This backdrop, coupled with the increasing obligations being placed upon the energy supply industry, meant that profits at British Gas Residential were down by 34 per cent.’
Centrica storage profits were down 14 per cent to £280m, following a drop in the cost of Standard Bundled Units (SBUs). The group’s Dutch division, Oxxio, also reported losses of £63m.
These results were offset by an increase in profits at Centrica’s gas production division, which benefited from the company’s ongoing cost efficiencies. British Gas Business and British Gas Services increased profits by 25 per cent with Direct Energy profits up 15 per cent.
Looking ahead, Centrica said that it is confident that customer demand for energy efficient homes will improve its prospects in 2009. The group announced that it will create 1,500 mostly ‘green collar’ jobs as it prepares for a £15bn investment in offshore wind, nuclear generation, gas storage and gas production by 2020.
Laidlaw said: ‘The financial performance in 2008 was good despite a much harsher environment. We made strong progress against the strategic priorities we set out at the start of 2007.
‘The outlook for the global economy remains very challenging and in the UK, 2009 could be particularly difficult for many of our customers, both residential and commercial. We will continue to place our customers’ needs at the forefront of our agenda, alongside our determination to deliver increasing long-term value for our shareholders.’