Proactive Investors - British Gas owner Centrica (LON:CNA) faced accusations of being tone-deaf today as it announced a big increase in profits and shareholder payouts as households struggle with soaring energy bills.
Centrica announced plans to return £250mln to investors through its first share buyback since 2014 a sum that dwarfed a £25mln rise in spending on customer support to £50mln.
The gas supplier added that earnings this year would be at the top end of expectations, though possibly with an eye on the upcoming budget announcement on 17 November added that retail profits would fall.
Talk of more windfall taxes on energy companies has been widespread ahead of chancellor Jeremy Hunt’s mini-budget and Centrica added there were significant uncertainties for its retail arm over the remaining two months of the year.
Weather, rising bad debts, high inflation and the impact of the cost of living squeeze were all cited as potential headwinds.
National Grid (LON:NG), meanwhile, also reported a big profits jump, though its dividend rise was a more modest 4% while it also unveiled more capital investment.
Operating profits rose 50% to £2.1bn, boosted by a six months contribution from UK Electricity Distribution and higher property sales.
Underlying earnings excluding the property element rose by 42% to 32.4p per share, with the FTSE 100 group also raising its EPS guidance for the year.
John Pettigrew, chief executive, said: “We have achieved £225mln of operating cost efficiency savings to date, and this is enabling us to mitigate some inflationary pressures on both the business and our customers.”
The grid receives a proportion of all energy bills as its revenue, with the current level around 10% of a household bill, while its level of profits is set by the UK regulator Ofgem.
In May, National Grid agreed to return £200mln to customers and last week set up a £50mln customer support package.
Between 2022 and 2026, National Grid added it also expects to invest up to £40bn in critical infrastructure, £5bn more than previously earmarked.
Centrica shares jumped 10% to 84.9p on the news, while National Grid added 2.4% to 1,010p.