British Gas owner hikes investor payouts despite 70,000 customers ditching the energy giant

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British Gas owner Centrica saw earnings in its household energy arm more than halve last year, as 70,000 customers jumped ship and it lost cost of living crisis subsidies.

Energy giant Centrica revealed that its British Gas energy supply division for households and businesses saw underlying profits nosedive to £297million last year, from £751million in 2023.

Profits across the wider business also fell, but Centrica said it will pay out more to investors in dividends and share buybacks, sending shares up 8 per cent.

The slump in household earnings came as energy crisis allowance payments stopped. The payments enabled suppliers to recover costs incurred during the upheaval in energy markets seen in the wake of Russia's invasion of Ukraine. 

But payouts became highly controversial, as they led to profits soaring at some energy firms. 

Centrica's results arrived as experts at Cornwall Insight forecast more bills pain for households, predicting an £85 rise in the Ofgem energy price cap to £1,823 in April. 

Preliminary results: British Gas owner Centrica said earnings in its household supply arm more than halved last year

Rising energy bills have been blamed for an increase in inflation - and the Bank of England has forecast CPI will continue to go up. 

Centrica's total residential customer base fell to 7.46million in 2024 from 7.53million in 2023. 

The wider Centrica business reported a 40 per cent drop in underlying operating profits to £1.55billion for last year, down sharply on the £2.75billion the previous year. 

On a statutory basis, Centrica’s operating profits fell to £1.7billion from £6.51billion in 2023.

But the FTSE 100 energy firm reported earnings before nasties of £2.3billion for the year ending 31 December, well above analyst forecasts of around £1.6billion.  

Centrica also announced further returns for its army of small shareholders, with a 13 per cent full-year dividend increase and an extra £500million in share buybacks, taking the total program to £2billion by the end of this year. 

Chief executive Chris O’Shea said it was a good year for Centrica, but stressed there was 'so much more we can do'.

He added: 'Looking ahead, I want to see Centrica continue to focus on the areas that make the biggest difference.

'We are investing in the energy transition, ensuring our customers have the energy they need, when they need it at a price they can afford.

'Everything we do must deliver an appropriate return, and our investments during 2024 demonstrate our ability to invest responsibly and profitably.'

Chris O'Shea, Centrica boss, says that it is investing in the energy transition

The group added that earnings in its household supply business would recover to stand 'within their medium-term sustainable adjusted operating profit ranges for 2025'.

The results showed the group's capital spending ramped up to £564million in 2024 from £415million in 2023.

Centrica also said it had signed a 15-year LNG supply agreement with Brazil's Petrobras that will start in 2027, and that it had concluded a review of its pension schemes to determine deficits. 

The group maintained its outlook for 2025.  

Centrica shares rose 7.58 per cent or 10.30p to 146.20p on Thursday, having risen over 9 per cent in the last year. 

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Russ Mould, investment director at AJ Bell, said: 'A bumper 2023 was always going to be a tough act to follow for Centrica and, sure enough, profit and revenue were sharply lower in 2024 as energy markets normalised and a one-off recovery of costs in its British Gas division didn’t, as implied, repeat.'

He added: 'However, it’s all about expectations for the market and Centrica came in ahead of what had been pencilled in, which, along with retaining its 2025 forecast, was sufficient to get investors energised. 

'The company is still throwing off a decent amount of cash and has a strong balance sheet which has allowed it to serve up further generous returns to shareholders.

'While it has had the odd brush with controversy over the significant profits it enjoyed after the energy price shock which followed Russia’s invasion of Ukraine, Centrica does seem to have fixed the roof while the sun was shining, making the business more resilient and well-resourced than it was before 2022.

'There may be some frustration at the lack of any update on the company’s potential investment in the Sizewell C nuclear plant ahead of the final investment decision in May.'