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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 28th Jul 11, 11:08 AM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    MSE News: British Gas owner posts 1.3bn profit, so why the price hikes?
    • #1
    • 28th Jul 11, 11:08 AM
    MSE News: British Gas owner posts 1.3bn profit, so why the price hikes? 28th Jul 11 at 11:08 AM
    This is the discussion thread for the following MSE News Story:

    "Centrica today reveals it made a massive half-year profit just weeks after British Gas price hikes were announced ..."

Page 1
  • eurmalian
    • #2
    • 28th Jul 11, 11:13 AM
    • #2
    • 28th Jul 11, 11:13 AM
    Surely in your 'Key Points' bar, British Gas' profit is every bit as important as Centricas. Or is it only fun to hilight the really big numbers?
    I am an employee of British Gas, however the views expressed on this post are mine and do not necessarily reflect the views of Centrica, its subsidiaries or affiliated companies.
    • smidgey
    • By smidgey 28th Jul 11, 11:35 AM
    • 163 Posts
    • 93 Thanks
    smidgey
    • #3
    • 28th Jul 11, 11:35 AM
    • #3
    • 28th Jul 11, 11:35 AM
    Yes eurmalian but it's the kind of poor journalism we've come to expect from MSE.

    My advice is that if you do intend to switch once all of the companies have made their pricing annoucements to do it directly via a cash back site or the energy suppliers site and not through MSE affilliate links.
    • TIMMY85
    • By TIMMY85 28th Jul 11, 11:40 AM
    • 169 Posts
    • 53 Thanks
    TIMMY85
    • #4
    • 28th Jul 11, 11:40 AM
    • #4
    • 28th Jul 11, 11:40 AM
    Quite a silly way to report it!
  • ihateyes
    • #5
    • 28th Jul 11, 12:07 PM
    • #5
    • 28th Jul 11, 12:07 PM
    This is the discussion thread for the following MSE News Story:

    "Centrica today reveals it made a massive half-year profit just weeks after British Gas price hikes were announced ..."




    Originally posted by MSE Helen

    come on MSE......

    is the 54% drop in residential profits a hint???

    Trying to sensationalize a non sensational story
    • MillicentBystander
    • By MillicentBystander 28th Jul 11, 12:21 PM
    • 3,450 Posts
    • 2,225 Thanks
    MillicentBystander
    • #6
    • 28th Jul 11, 12:21 PM
    • #6
    • 28th Jul 11, 12:21 PM
    When wholesale prices are high, they make very decent profits on their wholesale business and less on their retail business and vice versa. In effect, no matter what the wholesale price is, the company as a whole can't really lose. I'm surprised no-one has mentioned this on this thread already.
    • Joyful
    • By Joyful 28th Jul 11, 12:21 PM
    • 2,267 Posts
    • 1,180 Thanks
    Joyful
    • #7
    • 28th Jul 11, 12:21 PM
    • #7
    • 28th Jul 11, 12:21 PM
    Everyone knows that one does not subsidise the other so I'm really disappointed in this Journalism piece. Just over 3 pm profit per customer is not a lot. This is down from last year.
    ****Released the reins and am now Self employed****
  • pqrdef
    • #8
    • 28th Jul 11, 12:23 PM
    • #8
    • 28th Jul 11, 12:23 PM
    The bizarre thing is the schizophrenic attitude of the "authorities" towards competition. If Centrica were allowed to cross-subsidise British Gas, it could inflict some serious damage on its rivals. But it isn't.

    So we have regulators who are supposed to ensure that rivals compete and don't get too cosy. But as soon as somebody tries to exploit a serious competitive advantage, that's called "unfair" competition and the authorities protect the implicit cartel.
    • magyar
    • By magyar 28th Jul 11, 12:24 PM
    • 18,389 Posts
    • 30,446 Thanks
    magyar
    • #9
    • 28th Jul 11, 12:24 PM
    • #9
    • 28th Jul 11, 12:24 PM
    When wholesale prices are high, they make very decent profits on their wholesale business and less on their retail business and vice versa. In effect, no matter what the wholesale price is, the company as a whole can't really lose. I'm surprised no-one has mentioned this on this thread already.
    Originally posted by MillicentBystander
    Quite true, but don't forget that by law, the generation part of the business cannot subsidise the retail part.

    Ofgem did this to ensure fair competition with smaller suppliers who don't have generation capacity.

    BG have about 10m customers, I think - so this equates to 27/customer or roughly 0.5% margin. Hardly usury!
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
    • backfoot
    • By backfoot 28th Jul 11, 12:25 PM
    • 2,680 Posts
    • 2,215 Thanks
    backfoot
    When wholesale prices are high, they make very decent profits on their wholesale business and less on their retail business and vice versa. In effect, no matter what the wholesale price is, the company as a whole can't really lose. I'm surprised no-one has mentioned this on this thread already.
    Originally posted by MillicentBystander
    Because such threads are dominated by employees screaming foul play.

    Try to avoid. Never gets anywhere.
    • smidgey
    • By smidgey 28th Jul 11, 12:28 PM
    • 163 Posts
    • 93 Thanks
    smidgey
    Because such threads are dominated by employees screaming foul play.

    Try to avoid. Never gets anywhere.
    Originally posted by backfoot
    Yet you persist in posting drivel rather than avoid
    • magyar
    • By magyar 28th Jul 11, 12:28 PM
    • 18,389 Posts
    • 30,446 Thanks
    magyar
    Because such threads are dominated by employees screaming foul play.

    Try to avoid. Never gets anywhere.
    Originally posted by backfoot
    Shame, we could just have a discussion based upon facts rather than shoddy journalism, in which case it wouldn't matter how biases someone might be.

    I am no supporter of the big six, I think they have appalling practices in certain areas, but I know bad presentation of facts when I see them.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
    • MillicentBystander
    • By MillicentBystander 28th Jul 11, 12:31 PM
    • 3,450 Posts
    • 2,225 Thanks
    MillicentBystander
    Because such threads are dominated by employees screaming foul play.

    Try to avoid. Never gets anywhere.
    Originally posted by backfoot

    I sincerely hope they aren't posting whilst at work.
    • Cardew
    • By Cardew 28th Jul 11, 12:32 PM
    • 27,841 Posts
    • 13,711 Thanks
    Cardew
    I really fail to see the point of reporting a story in such a manner. The Daily Star would be proud, and sought the opinion of Jordan!!!

    So BG made 16 per account on their latest 6 month profits - how much profit do we think Sainsbury/Tesco/Asda make per customer? Tesco made 3.8 Billion profit last year(2.5 Billion from UK)
    • VT82
    • By VT82 28th Jul 11, 12:32 PM
    • 1,038 Posts
    • 877 Thanks
    VT82
    A mature private company that represents a defensive share needs to make profits. While the tone of the article attempts to be stir people up to think otherwise, It's simply not an option for them to keep prices at the point where they break even.

    They need to make profits to build up distributable reserves, because they need distributable reserves to pay dividends. Because if the dividend goes down, their share price goes down. And if their share price goes down, their cost of capital (debt or equity) soon goes up. Then prices would go up anyway.

    So shareholders would be worse off, existing bond holders would be worse off (holding a riskier share due to the increased leverage of the company, for the same return as before), and the customers would be left exactly as they were.

    I'm glad the people with brains got the comments in before the 'string 'em up brigade' joined the party at least.
    • magyar
    • By magyar 28th Jul 11, 12:35 PM
    • 18,389 Posts
    • 30,446 Thanks
    magyar
    So BG made 16 per account on their latest 6 month profits - how much profit do we think Sainsbury/Tesco/Asda make per customer? Tesco made 3.8 Billion profit last year(2.5 Billion from UK)
    Originally posted by Cardew
    And how many big supermarkets do we have? Ofgem keep complaining that we only have six big energy companies. The truth is you only need two companies actually competing to have competition.

    Not that I believe there is collusion, although I do think the big six do their best to avoid truly competing and very much stay out of each other's areas.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
    • backfoot
    • By backfoot 28th Jul 11, 12:35 PM
    • 2,680 Posts
    • 2,215 Thanks
    backfoot
    Yet you persist in posting drivel rather than avoid
    Originally posted by smidgey
    Just an observation based on reading lots of similar threads.

    I can accept,as you are an employee, you feel upset about the MSE article, but what did I say, other than agree with Milliscent that the BG employees are only focussing on the Supply Business and ignoring the full reported profit.

    It seems that the BG hard men are out in force this week......
    • magyar
    • By magyar 28th Jul 11, 12:37 PM
    • 18,389 Posts
    • 30,446 Thanks
    magyar
    AThey need to make profits to build up distributable reserves, because they need distributable reserves to pay dividends. Because if the dividend goes down, their share price goes down. And if their share price goes down, their cost of capital (debt or equity) soon goes up. Then prices would go up anyway.
    Originally posted by VT82
    And don't forget that new infrastructure has to come from somewhere. Whilst this will eventually come out of customers' bills, companies like Centrica have to spend their own money first - then recoup it.

    If they had no profits to do that with, then we'd never get new infrastructure.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
    • MillicentBystander
    • By MillicentBystander 28th Jul 11, 12:38 PM
    • 3,450 Posts
    • 2,225 Thanks
    MillicentBystander
    A mature private company that represents a defensive share needs to make profits. While the tone of the article attempts to be stir people up to think otherwise, It's simply not an option for them to keep prices at the point where they break even.

    They need to make profits to build up distributable reserves, because they need distributable reserves to pay dividends. Because if the dividend goes down, their share price goes down. And if their share price goes down, their cost of capital (debt or equity) soon goes up. Then prices would go up anyway.

    So shareholders would be worse off, existing bond holders would be worse off (holding a riskier share due to the increased leverage of the company, for the same return as before), and the customers would be left exactly as they were.

    I'm glad the people with brains got the comments in before the 'string 'em up brigade' joined the party at least.
    Originally posted by VT82

    I'm sure you weren't intending such a thing but this post just illustrates the absolute folly of selling off the industry in the first place. We've been left with a farcical situation where an industry which supplies a product that the human race relies on for its very existence can only talk about shareholders, bondholders, share prices, leverages blah blah blah, affiliate commission, door knockers offering their WORST deals etc etc. Maybe I'm just an idealist but IMO an industry which supplies a basic human need should never ever be entrusted to people who think in these terms.
    • magyar
    • By magyar 28th Jul 11, 12:38 PM
    • 18,389 Posts
    • 30,446 Thanks
    magyar
    Just an observation based on reading lots of similar threads.

    I can accept,as you are an employee, you feel upset about the MSE article, but what did I say, other than agree with Milliscent that the BG employees are only focussing on the Supply Business and ignoring the full reported profit.

    It seems that the BG hard men are out in force this week......
    Originally posted by backfoot
    I don't work for Centrica, am a big critic of the big six and I can promise you this is rubbish - for exactly the reasons stated in this thread.
    Says James, in my opinion, there's nothing in this world
    Beats a '52 Vincent and a red headed girl
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