Centrica PLC (LSE: CNA), the parent company of British Gas, has reported significant profits for the first half of the year, which has spurred an increase in investment, a raised dividend, and an expansion of their share buyback.
The adjusted operating profit surged by 55.2% during the first half of the year to reach £2.08bn, while net cash saw a tenfold increase to £3.06bn.
Centrica attributed this sharp profit rise in part to British Gas’s strong performance, with its retail division witnessing a tenfold rise in operating profit to £969mln.
This uptick was attributed to a recoup of costs which were incurred when wholesale prices began to rise in 2021. Ofgem’s price cap measures introduced in April included provisions to recover losses via customer bills.
Centrica’s statutory profit was reported to be £6.46bn, a significant increase from a loss of £1.09bn in the previous year.
CEO Chris O’Shea indicated that the substantial rise in profits was a “significant one-off recovery of past costs,” facilitated by the UK’s price cap mechanism, which influences bill amounts.
Owing to the robust earnings, Centrica announced a £450mln enhancement to its share buyback programme, which was first announced in November 2022, bringing the total to £1bn.
In addition, the company’s dividend was raised by 33% to 1.33p per share at the half-year mark.
O’Shea also introduced a new strategy for transitioning to green energy. The strategy involves Centrica significantly boosting its investments in clean technology to between £600mln and £800mln by 2028.
Commenting on the new strategy, O’Shea said, “The new green investment strategy we’ve announced will see us invest several billion pounds in the energy transition.”
He added, “Our robust balance sheet has allowed us to invest heavily and will ensure that our customers have cleaner energy at the right price.”
