British Gas owner warns on profit
May 12, 2008
Centrica, the owner of British Gas, has warned that profits will be squeezed by soaring gas and power prices and hinted that fuel bills could rise again.
It said that wholesale gas and electricity prices were 92% and 100% higher than a year ago.
And it would take "action to deliver reasonable margins", which could mean price rises for customers.
The warning of "materially lower" profit for the first half of 2008 comes despite recent British Gas price rises.
In January British Gas increased gas and electricity bills by an average of 15% in the face of rising wholesale prices.
Allan Asher, the chief executive of industry watchdog Energywatch, said that if British Gas raises prices, other suppliers follow suit.
"Sadly if one company goes ahead and raises prices, others will respond."
"For the fuel poor, it's terrible news," he told BBC News.
In April a note from French bank Societe Generale said Centrica's residential arm could be loss-making in the first half 2008, unless it raised domestic prices again.
Centrica shares were among morning fallers in London, down 1.57%, or 4.5p, at 283 pence.
"Today's announcement is likely to put downward pressure on consensus of 2008 estimated earnings per share of 26.2 pence, but this should not come as a surprise to investors given the current commodity price environment," Cazenove analysts said in a note.
Meanwhile, British Gas said that its customer service had improved, with complaints to Energywatch down 78% from 2007.
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