Centrica profits hit £1.25bn

British Gas owner Centrica has reported profits of £1.25 billion, with its residential arm making £533 million in the first half of 2007.

It followed a £143 million loss in 2006 and the boost came from higher margins before British Gas passed on lower wholesale gas costs to customers with two price cuts earlier this year.

The company - the first energy firm to announce lower prices in February - said it has added 46,000 new names in the second quarter to its database of 15.8 million UK customers.

It warned however that the "very strong" performance in the first half for its residential arm is not expected to be repeated for the rest of the year.

Centrica Energy's operating profits fell by 42 per cent to £337 million, as the business coped with lower gas demand as a result of a warmer winter and increased supply due to new pipelines from Norway and the Netherlands.

Sam Laidlaw, Centrica's chief executive, said: "Wholesale gas prices for the coming winter are high and there is still uncertainty over the level of price volatility and customer demand due to unpredictable weather patterns."

Mr Laidlaw said margins would be "more reflective" of long-term ambitions in the second half following the price cuts.

The company is aiming to achieve long-term margins of between 6 per cent and 7 per cent to allow investment of around £2 billion in large-scale infrastructure projects over the next three years, including new power stations and wind farms.

The company added that it had made progress with customer service and increased investment.

It said: "Whilst we have some way to go, we have progressively strengthened our performance in this area."

© Independent Television News Limited 2007. All rights reserved.