Profits at British Gas owner Centrica to rise as it cashes in on higher energy bills
British Gas owner Centrica (CNA.L) expects profits to be at the top end of analysts' forecasts as it cashes in on rising energy bills amid growing calls for a windfall tax on energy firms.
In a trading update on Tuesday, Centrica said it's been boosted by strong volumes from nuclear and gas production assets. Its trading business has also benefited from surging levels of activity as it looks to secure gas and renewable energy to improve the UK and Europe's security of supply amid the Ukraine war.
It added that it had "managed increased commodity price volatility well" over recent months.
However, the company warned that supply chain disruption and higher inflation are impacting costs and level of customer demand in its British Gas Services.
In the face of accusations of profiteering in the energy industry, the energy firm said it is investing £50m ($61.7m) in supporting customers through the current cost of living crisis, including grants of up to £750 and hiring 500 new customer support workers.
Read more: BP profits soar to highest in 10 years as calls grow for windfall tax
The company expects to make earnings of between 6.7p and 10.8p per share this year, Centrica said on Tuesday, up from 4.1p in 2021.
Centrica shares soared 4.7% following the announcement on Tuesday morning in London.
Watch: BP profit soars to highest in over decade
British consumers face a surge in energy bills as the price cap increased in April, soaring 54%, with a further rise expected at chancellor Rishi Sunak's next budget review in October.
However, the government has resisted calls for a windfall tax on energy companies. On Monday, Sunak said the government was still against a windfall tax on the profits of oil and gas firms, arguing this would "deter investment at a time we need it most, not least in renewable energy".
It comes after profits at FTSE 100 (^FTSE) energy stalwarts including BP (BP.L) and Shell (SHEL.L) rose, fuelling calls from Labour MPs and campaigners for a levy on the companies.
Calls for a windfall tax were renewed earlier this month after soaring oil and gas prices helped BP to record its highest quarterly profits in a decade.
It reported an underlying profit of $6.2bn for the first three months of this year compared to $2.6bn in the same period last year. The bumper earnings prompted calls for a one-off tax on energy companies to help UK households with rising bills.
Read more: Shell shares surge on record quarterly profits
Last week, rival Shell reported it had almost tripled its profits in the first three months of the year as oil and gas prices surged around the world. It posted an adjusted profit of $9.13bn in the first quarter, up from $3.2bn in the same period last year.
The results, which are Shell’s biggest quarterly profits since the beginning of 2009.
Shares in BP rose 0.7%, while Shell was 0.3% higher in morning trade on Tuesday in London.
Watch: Why are gas prices rising?