Bord Gáis owner resumes dividend payouts boosted by surge in energy prices
The Bord Gáis Whitegate power plant, Cork. British parent group Centrica supplies 513,000 customers in the Republic.
Britain’s energy giant Centrica — owner of Bord Gáis and operator of the Whitegate power station in Cork that sells gas and electricity to 513,000 customers in the Republic — has restored its dividend payout to shareholders on the back of a huge increase in first-half profit helped by soaring energy prices.
Centrica, which also owns British Gas and is a major supplier of energy in Britain, said its adjusted operating profits for the first six months climbed to £1.34bn (€1.6bn) from £262m a year earlier. Restoring the dividend which will be worth about £58m to shareholders also comes after the energy firm sold off a number of businesses.
However, the announcement comes at a time when households and businesses in Ireland and Britain continue to face huge hikes in gas and electricity bills amid the fallout of the Ukraine war that has helped to drive inflation to 40-year highs.
“We are very aware of the difficult environment many customers are facing and we will continue to support them,” chief executive Chris O’Shea said in an earnings statement.
In Ireland, the Centrica figures show that revenue at Bord Gáis Energy climbed to £784m in the first six months from £484m a year earlier. Its adjusted operating profits soared 74% to £33m, helped by Whitegate coming back on the grid in December, after a long downtime for maintenance.
Bord Gáis Energy supplies gas and electricity to households and businesses; is involved in installing and maintaining central heating boilers; and through gas-fuelled Whitegate powers electricity onto the grid.
“Bord Gáis Energy adjusted operating profit increased by 74% to £33m despite reduced retail margins in a challenging environment for energy supply,” Centrica said in the earnings statement.
Centrica’s profits and sales boost is being repeated across many of the world’s largest energy and consumer products makers, including Shell and France's Total, Nestle, and Diageo, the maker of Guinness and a host of spirits for world markets.
Shell made record profits of nearly £10bn between April and June and promised to give shareholders payouts worth £6.5bn as the oil supermajor benefited from the surge in energy prices.
It has been a period of roaring trade for Shell and other major oil and gas companies, in contrast to struggling households and much of the rest of the economy.
The UK government earlier this year gave in to demands for a windfall tax to redistribute some of the energy profits, although some senior Conservative ministers are thought to favour removing the tax.
Shell shareholders received $7.4bn (€8.bbn) in the first quarter of 2022 and will receive another $6bn in a share buyback and $1.8bn in dividends recently announced.
Ben van Beurden, Shell’s chief executive, recognised the “huge challenges for consumers, governments and companies alike” caused by the “volatile energy markets”, but argued that the company was “using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions and transforming our company for a low-carbon energy future.”
Vladimir Putin’s invasion means Shell may have to abandon its stake in the Sakhalin-2 gas project with Russia’s Gazprom as well as petrol stations in the country.
Yet the recognised costs of abandoning Russia are $4.3bn – just over a third of the profits Shell has made in three months after Kremlin troops entered Ukraine. The company had already booked costs worth $4.2bn related to its withdrawal from Russia, but it increased this estimate by only $111m in the second quarter of the year.
Shell said it expected the tight energy market was here to stay. It added $4.3bn to its income attributable to shareholders to account for higher-than-expected prices in the mid- and long-term “reflecting the current energy market demand and supply fundamentals”.
Consumer goods giant Nestlé has joined rivals such as Unilever, Reckitts, and Heinz Kraft by hiking its prices, boosting sales despite the cost-of-living squeeze.
The Kit-Kat-to-pet food manufacturer raised its prices by 6.5% in the first half of this year. Sales volumes grew 1.7%, as customers continued to buy products such as Purina pet food and coffee at those higher prices.
Nestlé has now lifted its sales forecasts for the year to 7% to 8%, from 5%, as demand for pricier branded goods holds up. But it also saw operating profit margins dip, due to rising input costs such as more expensive ingredients.
France’s TotalEnergies has also reported record earnings, on the back of soaring crude oil and gas prices, and soaring demand for natural gas in Europe.
Second-quarter adjusted net income rose to $9.8bn from $3.46bn a year earlier, beating the analysts’ estimates.
TotalEnergies, like Shell, is extending its share buyback programme into the third quarter of the year, meaning investors will continue to benefit from the energy price crunch.
Drinks giant Diageo, which makes Guinness and Baileys, is celebrating a surge in sales as hospitality firms reopened after pandemic lockdowns, and more people sampled expensive spirits.
Diageo also raised prices by “mid-single digits”, and benefitted from a shift to pricier spirits. Diageo’s net sales jumped up 21% in the year to 30 June, to almost £15.5bn.
This growth was due to continued recovery in sales to bars and restaurants, along with “resilient demand” from consumers buying drinks in shops and off-licences despite inflationary pressures.
In Europe, beer net sales soared, "with strong growth in Guinness driven by the on-trade recovery in Ireland and Great Britain". In Britain, Guinness sales grew 52%, and in Ireland, overall Diageo sales were up 71% driven by Guinness.
Diageo also makes Johnnie Walker whisky, Don Julio tequila, Smirnoff vodka and and Captain Morgan rum.
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