Sector movers: Commodity windfall repeat unlikely, says Centrica
Utilities are in the doghouse today as British Gas owner Centrica's massive profits predictably provoked a backlash against the company as its profit per customer increasing six-fold from £5.93 to £36.
Centrica's full year results were in line with expectations but the company warned high commodity prices are unlikely to be repeated in 2008.
"The favourable commodity picture we experienced in the first half of the year, which drove higher profits in the residential supply business and which was behind the stronger 2007 earnings, is unlikely to be repeated in 2008," said the group.
Pre-tax profit before exceptionals rose £1.87bn from £1.25bn before on revenue that fell 0.4% to £16.3bn. Increases in British Gas Services and British Gas Business were offset by the reduction seen in British Gas Residential due to lower gas and power consumption levels.
The group said wholesale energy prices remain "extremely volatile and the high gas price at the start of 2008 has squeezed retail supply margins in the UK."
It added that in such circumstances retail price increases have been necessary in order to restore reasonable margins. Last month British Gas hiked prices by 15% for 9.7m customers.
Legal & General leads the life assurance sector higher after it declared total bonuses of £665m in 2007, a 12% increase on the previous year.
A spokeswoman for L&G said the company rebalanced somewhat from equities and property in the last year to fixed assets, switching more than £3bn between asset classes in 2007, including about £1.5bn from equities "at what proved to be almost at the top of the market".
The group, which has around 800,000 with-profits policyholders, added that with-profits bond sales increased by 25% last year.
It also said that 25 year endowments maturing in March 2008 will hit their target amount with an average surplus of almost 40%.
Approximately 29,000 endowments matured in 2007, said L&G.
Top performing sectors so far today
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Mining 26,202.60 +3.79%
Forestry & Paper 4,044.60 +3.73%
Mobile Telecommunications 3,787.70 +2.72%
Household Goods 6,618.40 +2.24%
Media 3,645.10 +2.15%
Bottom performing sectors so far today
Gas, Water & Multiutilities 4,734.10 -0.86%
Construction & Materials 4,991.00 -0.72%
Electricity 7,470.80 -0.41%
Tobacco 24,293.60 -0.26%
Health Care Equipment & Services 4,069.40 -0.17%
