Centrica PLC (LSE:CNA) announced strong annual profits growth, boosted by higher commodity prices in its upstream business and a reduced impact from the COVID-19 pandemic.
Underlying profits (EBITDA) rose to £1.85bn in the year to 31 December 2021 from £1.33bn in the previous year, while adjusted operating profit jumped 112% to £948mln, the energy giant said in its earnings release.
Soaring wholesale gas prices have led to the collapse of 29 UK energy suppliers since August last year and Centrica said there is a need for “significant change” to address the underlying issues in the UK energy market.
The British Gas owner reported a strengthening of its balance sheet, with net cash amounting £700mln at the end of 2021 compared with net debt of £3bn a year before.
The company described the outlook for 2022 as broadly positive and said its strong balance sheet and risk management mean it is well placed to handle the crisis in the energy market.
However, it noted that that “high and volatile wholesale commodity prices and a changing regulatory environment create a wider range of outcomes than normal for 2022”.
It said the turnaround of the company continues and that efforts to simplify its portfolio are nearly complete following the disposal of Direct Energy and agreed sale of Spirit Norway.
Centrica said it is now on a “clear path” to restart paying a dividend.
"Our strong balance sheet and responsible business model has allowed us to ensure continued supply for customers whose suppliers have ceased trading and offer additional help to those most vulnerable through the ongoing energy crisis,” commented Centrica chief executive CHRIS O'SHEA.
“2021 financial performance was resilient, and we continue to make good progress towards the turnaround of Centrica, having materially completed our portfolio simplification. Our focus for 2022 is on building on the progress we have already made to drive improvements in colleague engagement and in particular customer service, while continuing to build our capabilities to help our customers on their path to net zero."