British Gas Owner Centrica Lifted By Good First-Half Performance

Published in Company Comment on 26 July 2012

The UK energy company reports increased earnings and a positive outlook.

Centrica (LSE: CNA) turned in a good set of half-year figures this morning, lifting its share price just over 1% on opening. Adjusted earnings rose 14% to £767m, giving adjusted earnings per share of 14.8p, although these figures may be flattered by a return to more typical level of UK residential energy consumption, compared to the first half of 2011, when revenue was hit by an unusually mild winter.

Upstream production benefited from a combination of new investment and expansion of Norwegian operations via £1bn of acquisitions, with substantial progress reported towards Centrica's annual production target of 75 mmboe.

Looking ahead, new gas development projects will bring 140mmboe of reserves into production, and the £1.4bn Cygnus project -- the largest gas discovery in the Southern North Sea for 25 years, which will produce 5% of the UK's total gas production (or enough gas to supply around 1.5 million homes) -- remains on track, following the recent announcement from the UK Government on the shallow water gas field allowance.

With a greener tinge, Centrica's £1 billion Lincolnshire wind farm is due to commence generation soon, supplying around 200,000 homes, and planning consent has been awarded for 580MW Race Bank wind farm, with a final investment decision expected in Q1 2013.

Sam Laidlaw, chief executive, commented:

"Centrica has performed well in the first half of 2012 despite challenging market conditions, although the increase in earnings must be placed in the context of unusually low levels of consumption and profits in the UK in the first half of 2011. We continue to focus on high standards of service, while ensuring that we run the business as efficiently as possible for the benefit of our customers. We have made significant investments to secure energy supplies for the UK – and will continue to invest across the Group, where we see value. As a result, we have a stronger business that is delivering benefits for all our stakeholders."

With generally good results, a positive outlook and a forecast yield of 5.2% for the full year, Centrica certainly looks an attractive proposition.

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> Jon doesn't own shares in Centrica.

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EnKay1 26 Jul 2012 , 1:35pm

Its good for the company, but bad for consumers. British Gas have simply increased prices to generate increased profit. Consumer consumption was fairly flat over the year, whereas the prices and profits up considerably more.

richjfool 26 Jul 2012 , 4:53pm

No mention of Neil Woodford, - how refreshing.

Yes Centrica have done well, Good dividend and up over 4% on the day. Glad I advised myself to buy.

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