BusinessCompany NewsBusiness is a gas for Centrica

Business is a gas for Centrica

The warm weather may be good for most of us, but it can be trouble for a company that supplies gas to homes across the UK. Fortunately for FTSE-100 group Centrica, its broad corporate portfolio means that its half-year results should meet market expectations when it announces them today, despite the favourable climate.

Centrica has its fingers in many pies. As well as running British Gas, it also owns car insurance specialists AA, financial services company Goldfish and several others. It is this wide range of businesses that helps it tough out any bad times in a particular market. But it will make the job for group finance director Phil Bentley extremely challenging.

It doesn’t, however, seem to have stopped the company from growing.

Since deregulation of the energy market, gas suppliers have been allowed to provide electricity and other services. Bentley’s head for figures will have helped in the group’s acquisition of several power stations to control its own supply. The latest, Barry power station in South Wales, should now be completed if Bentley has arranged the finances in time.

Despite the expected drop in gas consumption due to the hot weather, the UK energy market has displayed underlying strength, according to the company. With the latest power station acquisitions, the group can now source 25% of its own energy requirements instead of having to buy it in from other companies.

Centrica has registered a net increase of 200,000 energy customers so far this year. It has a 64% market share for residential gas and now has six million residential electricity customers, representing about 23% of the market. It will also benefit from increases in the price of gas and electricity to customers, while cutting costs through its strategic transformation programme.

One part of the group that is in a state of flux is Goldfish. Centrica has said that sales of its products had been encouraging, but that upheaval in the financial services market was forcing the group to consider its plans for Goldfish. The company is expected to break even by the end of the year, but if this is not achieved it could mean the end for the brand.

Elsewhere One.Tel, one of its communications businesses, is also on track to achieve its profit target while its Centrica Business Services division has continued to grow with the addition of Enron Direct and Electricity Direct.

‘While we will continue to make selective investments where there are good value creation opportunities, we’ve now moved into a phase where we’re focusing on delivering value from our existing businesses and from the investments we’ve already made,’ said chief executive Roy Gardner.

– For more, see www.centrica.co.uk.

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