Centrica predicts H1 profit fall
Centrica Plc, the owner of British Gas, said on Monday that it expected operating profit for the first half of 2008 to be "materially lower" than in 2007. Centrica said the drop could largely be attributed to lower profitability in British Gas Residential, "which experienced exceptional conditions" earlier in the year.
Centrica profits rise 40%Centrica said that wholesale gas and power prices remained "stubbornly high", with wholesale gas in the second half of 2008 double that of the same period in 2007.
At current forward wholesale energy prices Centrica said that its operating profits in its upstream gas production business would be very strong, although results would be offset by losses in the industrial and commercial gas sales contracts.
Centrica said that the shift in profit mix would increase its effective tax rate to an estimated 55 per cent.
Centrica said, "While the current outlook for gas prices does create a challenging environment for energy suppliers, we will take the necessary action to deliver reasonable margins in the retail business."
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