British Gas owner sees supply arm back to 'sustainable' profit two years early

05 June 2024 , 09:58

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British Gas is holding its annual general meeting on Wednesday (Image: 2024 PA Media, All Rights Reserved)

British Gas owner Centrica says that its household supply arm is set to return to a "sustainable" profit level by 2024, a full two years ahead of schedule, as energy markets stabilise post-crisis.

The firm, gearing up for its annual general meeting (AGM) on Wednesday, said it was optimistic about the "more normalised external environment" following the recovery of energy markets from the turmoil and price spikes triggered by Russia's conflict with Ukraine.

Centrica has confidently stated that both its retail supply and optimisation businesses are on track to achieve their "medium-term sustainable adjusted operating profit" range by 2024, beating their original timeline. The company expects operating profits for its British Gas residential energy supply division to be in the region of £150million to £250million.

Moreover, the financial outlook for its British Gas services and solutions sector is also looking brighter this year, as it advances towards a sustainable earnings target ranging from £100million to £200million, the group disclosed. Centrica assured stakeholders that it's performing in line with expectations for the current year, although it anticipates that profitability will be "strongly weighted" towards the first half.

Despite the positive forecast, Centrica's shares dipped by 4% during early trading on Wednesday. At its AGM taking place in Glasgow, the company might face some tough questions from investors regarding chief executive Chris O'Shea's £8.2million remuneration package.

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Mr O'Shea has previously openly admitted that there was "no point" trying to defend his steep salary, as households across the UK grapple with skyrocketing energy bills.

It was disclosed that his earnings increased £4 million in 2023, up from £4.5 million in 2022. This figure comprised £1.4million in annual bonuses and a potential bonus of £5.9million in future share awards, besides his basic annual salary of £810,000.

Pensions and Investment Research Consultants, a prominent shareholder advisory group, proposed that investors should oppose Mr O'Shea's pay package for 2023 in the upcoming AGM.

Lawrence Matheson