British Gas owner forecasts eightfold rise in earnings amid soaring gas prices

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The owner of British Gas, Centrica, expects a near eightfold increase in its earnings this year due to its balance sheet being boosted by soaring wholesale gas prices after Russia’s invasion of Ukraine.

The FTSE 100 group said on Thursday it expected earnings a share to be more than 30p this financial year. That represents an upgrade on City expectations of 23.6p to 26.6p a share, far outstripping the 4p a share generated in 2021, when pre-tax profits hit £761m.

It is the third time Centrica has upgraded its annual expectations this financial year, and the second time in three months.

In a brief, unscheduled statement to investors, Centrica said it had “continued to deliver strong operational performance from its balanced portfolio” and expects to have more than £1bn of cash on its balance sheet for this year.

The statement risks stoking further anger over the profits made by energy producers since the outbreak of war in Ukraine, which has pushed up wholesale gas prices far above historical averages.

The company – alongside UK oil and gas giants BP and Shell – faced criticism on reporting bumper profits while consumers struggled with bills last year.

Centrica said in November that the performance of its North Sea gasfields and electricity generation assets – it owns 20% of the UK’s nuclear fleet – meant full-year profits would be towards the top end of expectations.

“The upgrade appears to be driven by stronger profits in the trading and gas storage businesses, which is a continuation of the themes Centrica has seen through the year,” said RBC analyst Alexander Wheeler.

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The company reinstated its dividend with a £59m payout to shareholders last year and in November launched a £250m share buyback, the first since 2014.

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However, analysts expect Centrica’s business supplying homes with gas and electricity to make a loss in the second half of the year. British Gas last year announced it would donate 10% of its profits to help its poorer customers manage rising gas and electricity bills for the “duration of the energy crisis”.

Centrica’s shares – which have risen more than 30% over the last 12 months – increased 6% to 97p on Thursday morning, making it the top riser on the FTSE 100. It will report full-year results on 16 February.

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