Energy provider Centrica cranked up a healthy increase in underlying profits in the first half of 2012, though the company admitted that its performance had been flattered by unusually low levels of consumption in the UK in the first half of last year.
Underlying profit before tax rose in the six months to the end of June to £1,258m from £1,144m the year before. Once exceptional items and certain re-measurements are factored in, the rise in profits becomes even more eye-catching, with the 2012 figure of £1,679m well ahead of the 2011 figure of £1,176m.
Adjusted operating profit jumped 15% to £1,447m from £1,262m the year before, despite a 27% decline in operating profits from business energy supply and services in the UK. Total operating profits from the provision of energy in the UK, where the company trades as British Gas and Scottish Gas, was up 9% year-on-year to £563m from £518m in the first half of 2011.
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The group's UK upstream assets - its assets in the North Sea and suchlike - delivered improved operating profit of £682m, up from £531m in the first half of 2011.
Adjusted earnings after tax rose 14% to £767m from £673m the year before, leading to adjusted earnings per share (EPS) of 14.8p, up from 13.0p at the half-year stage in 2011. Broker Charles Stanley had forecast EPS of 14.2p.
Revenue was up 4% to £12.0bn from £11.5bn.
"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," claimed Sam Laidlaw, Centrica's Chief Executive.
Over the full year the group expects to deliver further earnings growth, weather and other factors permitting.
"Upstream production will benefit from our recent North Sea acquisitions and given our upstream forward hedging profile, the recent falls in commodity prices will not have a significant impact on upstream earnings until 2013. In power generation, conditions remain difficult for our gas-fired power stations, and will worsen following the loss of carbon allowances from 2013, which in the current market conditions will render much of the UK gas-fired generation fleet unprofitable," the group said.
The interim dividend has been lifted by 8% to 4.62p from 4.29p last year, pretty much in line with expectations.
JH
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