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Central heating services still strong despite British Gas profit slump

Operating profits at British Gas parent company Centrica have slumped by 20 per cent due to soaring gas prices, but profits have continued to grow significantly within the installation and services division.

British Gas announces 35 per cent price hike. Click here for more
The company made its interim results announcement for the first six months of the year just a day after unveiling a record price hike for gas prices of 35 per cent.

Whle overall profits fell Centrica's British Gas Services division saw operating profits rise by 35 per cent. 

Sam Laidlaw, chief executive, said: “We produced a good set of results in tough market conditions and against a record first half in 2007.

“Through the rest of 2008 and beyond we will continue to concentrate on improving customer service in British Gas, driving inefficiencies out of our entire business, moving a disciplined manner towards a greater level of vertical integration and pursuing value-adding growth opportunities in all our businesses.”

The interim results for the first half of 2008 showed group revenue was up £1.4 billion to £10bill, but operating profit fell from £1.2bill to £992 million.

However, the statutory results which featured certain re-measurements on unrealised net gains on energy procurement and sale contracts showed a slightly different picture. With these figures included operating profit increased from £1.6bill to £2.965bill and earnings went up from £1bill to £1.8bill.

Despite the problems facing the group, British Gas Services – which covers installations and central heating service contracts – reported a strong performance for the first half of the year with a 35 per cent increase in operating profit to £85 million.

The results report said: “Operating profit increased by 35 per cent reflecting the strong growth in higher margin care products outside the original central heating range, combined with the continued focus on cost control.”

Revenue was up eight per cent to £664mill as ‘customer product relationships’ rose to 7.8mill.
There was “particularly strong growth” of nine per cent for Plumbing and Drain Care products while Home Electrical Care products rose by 16 per cent.

The company also said it maintained its position in the on demand market – carrying out 150,000 jobs.

Meanwhile, 54,000 central heating installations were undertaken and the company said this was broadly in line with 2007 levels “despite a more challenging economic climate”.