British Gas full-year profit up 9 percent
British Gas has reported an increase in its 2012 profits, as the colder weather during the year lifted consumers' energy consumption.
The company, which is the residential arm of energy giant Centrica, said its total operating profit for 2012 increased 9 percent to £1.1bn (€1.3bn, $1.7bn) from the previous year.
Gross revenue increased 12 percent to £13.9bn on year, due to higher gas volumes. Average gas consumption rose by 12 percent to 494 therms in 2012, on the back of unusually cold weather.
By segment, residential energy revenues rose to £9.1bn from £7.9bn, as average household gas consumption rose by 12 percent along with higher retail tariffs. British Gas raised tariffs by 6 percent for around 8.4 million households at the end of 2012. Operating profit for the segment rose 11 percent to £606mn.
In residential services, gross revenue increased slightly to £1.7bn from £1.6bn in 2011, as a rise in revenue from insulation jobs more than offsetting a decline in installations revenue. Operating profit increased by 16 percent to £312mn.
In business energy supply and services, gross revenue increased to £3.1bn from £2.8bn, while operating profit declined by 9 percent to £175mn due to the challenging external environment.
Nevertheless, total customer accounts declined by 1.5 percent to 24,982 at the end of 2012.
In 2012, the company lowered its operating costs by 0.5 percent to £1.42bn, despite the weak economy and energy cost increases. During the year, British Gas closed its Southampton call centre, outsourced a number of roles in British Gas Services and British Gas Business, reduced IT costs through new working practices, offshored and transitioned to new data centres and agreed on improved commercial terms with suppliers.
Further, British Gas is on track to deliver £300mn of cost savings by the end of 2013, with a range of initiatives including a pay freeze for employees and changes to the defined benefit pension schemes.
Centrica, which owns British Gas, reported adjusted operating profits of £2.7bn, up 14 year-on-year. The company paid more than £1bn in tax and invested £2.7bn in 2012.
Centrica also announced that Phil Bentley, managing director of British Gas, is resigning to pursue his ambition to be a chief executive.
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