British Gas Profits Halve as Warm Weather Hits Energy Demand
British Gas owner Centrica has reported a dramatic slump in annual earnings, with group profits nearly halving in what the company described as a "challenging" year. The energy giant's underlying operating profits fell to £814 million for the last year, a sharp decline from the £1.55 billion recorded in 2024.
Warm Weather Drives £80 Million Hit
The household energy supply business was particularly hard hit, with earnings plunging 39% to £163 million. Centrica attributed this significant drop primarily to warmer weather conditions, which led customers to turn down their central heating thermostats, reducing energy consumption. The company quantified the weather impact at £80 million over the full year.
Additionally, profitability was further eroded by customers increasingly switching to fixed price energy products, which typically offer discounts compared to standard variable tariffs. This shift in customer behavior reduced profitability compared to the previous year.
Changing Customer Landscape
The group now has 32% of its customers on fixed price tariffs, up from 25% at the end of 2024. This represents nearly a third of its customer base opting for more predictable, though often cheaper, energy pricing structures.
Despite the challenging trading conditions, Centrica achieved a notable milestone: customer growth across all its retail businesses for the first time in over a decade. UK and Ireland household customer numbers increased by 1% to 7.96 million over the year, with 7.5 million located in the UK.
Acquisitions Boost Customer Numbers
This growth was partly bolstered by the acquisition of 91,000 customers from failed suppliers Rebel Energy and Tomato Energy last year. Centrica noted that these gains "offset a small decrease in underlying customers," helping to reverse a longstanding trend of customer attrition.
Chief executive Chris O'Shea commented on the mixed results: "The environment has been challenging, and performance has varied across the business. However, we have remained disciplined, delivering strong operational performance and achieving customer growth across all our retail businesses simultaneously for the first time in over a decade."
The company's performance highlights the complex dynamics facing the energy sector, where weather patterns, customer tariff preferences, and market consolidation all play significant roles in determining financial outcomes.
