British Gas Huge profits

magyar

spiro wrote: »

The government decided to seel the countries silver and now we have to pay for it. What you'll never know is how much the other 5 of the big 6 make in the UK because they are not UK owned.

Actually only four are foreign-owned. Scottish and Southern Energy is also a UK company.

And EDF, RWE, E.ON and Iberdrola all have to produce annual figures; usually they will state what the profits are on a country by country basis - although I agree they don't have to split it out like this.

JennyR68

Cardew wrote: »

Correct!

Well £3 a month per household; so £36 a year.

It would work out at around that just on the amount of residential customers, they must have commercial customers too? which would drop the per household figure further.

Personally I would have expected a bigger profit generated from each household. So can't complain.

Gerrard_8_lfc

British Gas Services - £233 Million ( Customer Growth of 400.000 to 8.5 Million)
British Gas Energy - £595 Million ( Customer Growth of 140.000 to 15.8 Million )
British Gas Business - £183 Million.
Total = £1.011 Billion profit.

People are ignorant to the fact that a business must make money or it wouldnt be a business. only SSE and BG have to annouce profits as the rest can hide it behind there countries so its not as well documented you never here outrage like this when Tesco annouce profits or banks as Cardew said.

Centrica Storage and Direct Energy Had a reduction in Profits.

magyar

Cardew wrote: »

Anyone care to hazard a guess at the profit per account BG made?

As said above, that's residential account. As you imply, profit per residential account is actually very, very low.

Likewise major customers (huge corporates etc.) will all have buying managers looking after their accounts.

However they absolutely cream their small to medium business customers. That's where most of their real profits come from.

Davidboy

Also, you need to look into what BG do with those profits. Currently investing in Nuclear Energy, and a major investor player in wind farms. They need the profits to invest for our future energy needs.

Log onto Centrica.co.uk it tells all they are doing and investments made. Funny how the media fail to mention all this.


D

mech_2

magyar wrote: »

As said above, that's residential account. As you imply, profit per residential account is actually very, very low.

There seems to be a certain amount of spin that way. But "customer accounts" doesn't equal "households". A dual fuel customer has two accounts. Then there are the upstream businesses. Half of the electricity British Gas sell and 80% of the gas goes to their UK residential customers (and gas in 2009 was much more profitable than electricity), so the operating profit from Centrica's upstream UK operations should also be counted. I reckon this comes to somewhere around £1billion. So among roughly 10 million residential customers (as opposed to customer accounts) that must average about £100 per customer. The average household energy bill is surely not less than £900, so that's upwards of 11% margin per household. Evil Tesco's operating profit last year was less than 6%.

Likewise major customers (huge corporates etc.) will all have buying managers looking after their accounts.

However they absolutely cream their small to medium business customers. That's where most of their real profits come from.

Not according to the figures published in their preliminary results.

Operating margin for British Gas Business energy supply and services was 5.5% compared to 7.6% for the British Gas Residential arm.

The most profitable business seems to be their residential services division (quelle suprise) with all those central heating service contracts where they charge you a couple of hundred quid a year to send someone to peer into your flue. 16.6% margin.

It's all in here: http://www.centrica.com/files/results/2009_prelim_results.pdf

magyar

mech wrote: »

There seems to be a certain amount of spin that way. But "customer accounts" doesn't equal "households". A dual fuel customer has two accounts. Then there are the upstream businesses. Half of the electricity British Gas sell and 80% of the gas goes to their UK residential customers (and gas in 2009 was much more profitable than electricity), so the operating profit from Centrica's upstream UK operations should also be counted. I reckon this comes to somewhere around £1billion. So among roughly 10 million residential customers (as opposed to customer accounts) that must average about £100 per customer. The average household energy bill is surely not less than £900, so that's upwards of 11% margin per household. Evil Tesco's operating profit last year was less than 6%.

I agree that if you divide profits by customers you end up with that number. However the general public don't seem to realise this is actually forced onto the Utilites by Ofgem; who insist that you have to have separate upstream/generation and supply businesses.

This means that you cannot cross-subsidise, and so the upstream businesses are what's making this true profit. The margin on a single customer is indeed about £40-60 a year to the supply business.

mech wrote: »

Not according to the figures published in their preliminary results.

Operating margin for British Gas Business energy supply and services was 5.5% compared to 7.6% for the British Gas Residential arm.

The most profitable business seems to be their residential services division (quelle suprise) with all those central heating service contracts where they charge you a couple of hundred quid a year to send someone to peer into your flue. 16.6% margin.

It's all in here: http://www.centrica.com/files/results/2009_prelim_results.pdf

Yes, but BGB would include both SMEs and large users in one pot. The corporates probably only account for 1-2% profits whereas the SMEs are probably in the 8-9% bracket.

I don't disagree with you that the services divisions are completely fleecing people!

Cardew

Mech,

Two points.

BG make £38 per household! not per account. They supply to 15.8 households; some of those households are dual fuel, some electricity only and some gas only.

Secondly as pointed out in post#10 Centrica simply cannot cross-subsidise BG. This is surely a sensible regulation as allowing BG to undercut all other companies would destroy any competition.

Bark01

The guy from BG on breakfast news said BG was making money but Centrica was losing money. People on here to seem to be suggesting otherwise was he being liberal with the truth?

Cardew

Bark01 wrote: »

The guy from BG on breakfast news said BG was making money but Centrica was losing money. People on here to seem to be suggesting otherwise was he being liberal with the truth?

BG profits rose and Centrica's profits fell slightly - but they still made a lot more money than BG.