B Gas £2 billion profit shame

alared

British Gas chiefs have signalled further price cuts later this year amid anger over profits at its parent company.
Centrica made operating profits for 2008 of almost £2billion, despite the fact that profits at British Gas fell by a third to £379million.

http://www.dailymail.co.uk/news/article-1156263/British-Gas-signals-price-cuts-anger-grows-parent-companys-2billion-profits.html

Lets hope it`s a bit more than their last effort of 10% that really turned out to be 3.6%:mad: :mad: :mad:

mech_2

So Centrica's 2008 pre-tax profits are fairly similar to 2007 (except after tax their earnings are down 20% due to a higher effective tax rate).

Hmm.

tripled

I don't understand the 'B Gas £2 billion profit shame' of your title. The fact that British Gas profits have fallen by a third suggests they are making less money off their customer's backs (which may/may not be a good thing depending on the reasons why). Surely the fact that Centrica, an international company, is making a decent profit is good for 'Sid', and for the pensions funds and other investors in the company?

1carminestocky

tripled wrote: »

I don't understand the 'B Gas £2 billion profit shame' of your title. The fact that British Gas profits have fallen by a third suggests they are making less money off their customer's backs (which may/may not be a good thing depending on the reasons why). Surely the fact that Centrica, an international company, is making a decent profit is good for 'Sid', and for the pensions funds and other investors in the company?

What BG lose on their 'downstream' business they gain on their 'upstream' business and vice versa. They can't *really* lose, TBH.


PS I would be wary of trusting any company whose MD is so terrible at forward thinking, TBH. Here's what Old Bentley said on 30/7/2008:

The company's managing director, Phil Bentley, said: "We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.

"The simple fact, though, is that we have entered an era of unprecedented high world energy prices.

http://www.guardian.co.uk/money/2008/jul/30/householdbills.familyfinance

Oh dear...

PPS I think Patrick Collinson in the Gruniad has this company's number:

http://www.guardian.co.uk/money/2008/jul/31/householdbills.consumeraffairs

dannymccann

Dont forget though companies need to make a profit to continue reinvesting in services they provide! I dont necessarily agree with abnormal profits any business makes (except my own :rolleyes: ) but people have to understand that business NEED to make profits of some sort to stay a going concern

1carminestocky

dannymccann wrote: »

Dont forget though companies need to make a profit to continue reinvesting in services they provide! I dont necessarily agree with abnormal profits any business makes (except my own :rolleyes: ) but people have to understand that business NEED to make profits of some sort to stay a going concern

Agreed....but I have always been firmly of the opinion that private companies should never be allowed to 'sell' essential services and privatising the energy industry in particular was a scandalous thing to do so I'm not at all sympathetic to the needs of the particular market.

tripled

1carminestocky wrote: »

What BG lose on their 'downstream' business they gain on their 'upstream' business and vice versa. They can't *really* lose, TBH.

True to a certain extent, but if they didn't have an upstream business they would have to buy all of their gas at market rates, so there wouldn't be any benefit to the consumer.

1carminestocky

tripled wrote: »

True to a certain extent, but if they didn't have an upstream business they would have to buy all of their gas at market rates, so there wouldn't be any benefit to the consumer.

Agreed, BUT and it's a BIG but....why the need to split the profits in 2? It's dodgy practice. It just means they can state their profits per customer are low, when anyone with half a brain and the use of google can see that it's basically a nonsense. If there wasn't the 'downstream' business there wouldn't be a need for the 'upstream' business. So why split it?

tripled

The upstream business doesn't just supply just BG residential - there is also BG business, industrial users, their power stations, etc. Then there is also the storage business (another entity) that stores gas for BG residential, but also for other suppliers, traders, etc. Ignoring the regulatory issues, in this context do you think that be merged in too? How about the money they make off gas transportation services, such as the Interconnector pipeline, which again profits not only off BG residential but also off other providers?

I'm just not sure how you could easily separate the business into 'residential supply and production' (and everything in between) and all the other activities.

dannymccann

1carminestocky wrote: »

Agreed....but I have always been firmly of the opinion that private companies should never be allowed to 'sell' essential services and privatising the energy industry in particular was a scandalous thing to do so I'm not at all sympathetic to the needs of the particular market.

This is what I was trying to explain to my OH the other night on the way to Tesco, anything essential needs to be owned either fully or majority (51%) by the government to ensure the best possible coverage not based on consumer ability to pay.

If the policing of the UK were to be sold off we would end up like South Africa People paying for their own protection while the poorer left to rot

1carminestocky

tripled wrote: »

The upstream business doesn't just supply just BG residential - there is also BG business, industrial users, their power stations, etc. Then there is also the storage business (another entity) that stores gas for BG residential, but also for other suppliers, traders, etc. Ignoring the regulatory issues, in this context do you think that be merged in too? How about the money they make off gas transportation services, such as the Interconnector pipeline, which again profits not only off BG residential but also off other providers?

I'm just not sure how you could easily separate the business into 'residential supply and production' (and everything in between) and all the other activities.

Yes to all your questions there. The fact is all the profits you mentioned are derived from gas. When BG claim to be making just a few quid from each of their customers you and I know that it's actually a nonsense.