Centrica’s profits have reportedly taken a huge drop of 35% in the first 6 months of this year, dropping to £1,032 million “reflecting a challenging market environment, mild weather in the UK and the Polar Vortex in North America”.
A milder than average winter meant that British Gas Residential profits were down 26% to £265 million.
“The first half of the year has seen challenging market conditions across the group, both as a result of the weather and reflecting the wider political environment,” said outgoing chief executive Sam Laidlaw.
But despite expectations that growth will return with the start of normal weather conditions the company said no retail price cuts will be made this year.
Tariffs are 4% higher than last year but won’t be reduced despite multi-year lows on the wholesale energy markets due to the company’s forward buying strategy and higher expected costs relating to the carbon tax and network charges, Centrica said.
The company explained that its gas and electricity requirements are contracted up to three years in advance meaning that the majority of gas needed for the coming winter was already purchased before wholesale prices declined to current levels.
Centrica added that despite lower market prices it is not increasing profits on its consumer bills, pointing out that the profit per household in 2014 is 20 per cent lower than last year at around £51 before tax, due to lower consumption of gas.