27th Jul 2023 11:46
(Alliance News) - Centrica PLC's interim results were cheered by investors, but AJ Bell warns its strong numbers amid a cost-of-living crisis could see it in the "firing line" of politicians and regulators.
The Windsor, England-based owner of British Gas said it swung to a pretax profit of GBP6.42 billion from a pretax loss of GBP1.18 billion a year prior.
Shares in Centrica rose 7.0% to 132.05 pence each in London on Thursday.
Revenue soared by 60% to GBP16.52 billion from GBP10.32 billion the year before. This includes a GBP3.7 million contribution from the government relating to the Energy Price Guarantee, and a further GBP449 million from the Energy Bill Relief Scheme.
Another GBP319 million came from contracts with customers, while GBP130 million related to non-domestic British Gas customers.
Centrica declared an interim dividend of 1.33 pence per share, up 33% from 1.0p per share the year before. It also extended its share buyback programme by GBP450 million, having bought back GBP340 million shares over the first half.
"The strengths of Centrica's integrated model have really come to the fore in recent times and after several lean years, the company is able to reward investors handsomely – lifting its dividend substantially and extending a share buyback," said AJ Bell investment director Russ Mould.
However, Centric needs to "tread carefully" given how many of its customers are struggling financially, Mould contends.
Centrica said its results would allow it to increase its customer support package to more than GBP100 million - somewhat lagging behind the amount it plans to return to shareholders.
"The scandal over forced installation of pre-payment meters means the company is already skating on thin ice," Mould recalled.
In recent months, energy regulator Ofgem has reviewed how British Gas and others have been treating customers unable to pay their bills.
Data shows that more than 94,000 prepayment meters were forcibly installed last year without consent when a customer had not paid their bill. Around seven in 10 of those installations were carried out on behalf of British Gas, Scottish Power or Ovo Energy.
"Political and regulatory pressure may mount on the business if it continues to show largesse with its shareholder returns while taking a hard line with vulnerable customers. All in all, these stonking numbers could put Centrica in the firing line," Mould warned.
By Elizabeth Winter, Alliance News senior markets reporter
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