Centrica has reported that profits in its British Gas energy division soared to £751m in 2023, a figure hugely up on the £72m it took in 2022.

In the energy supplier’s annual results for the 2023 calendar year, the group reported that its total operating profit came in at £2.8bn, a figure down on the previous year’s £3.3bn, however.

Centrica stated that profits in its retail operation, which its British Gas energy division comes under, helped to offset declines in profits across other areas of the business.

Most notably, Centrica Energy, which deals in asset management and energy trading, saw profits drop significantly to £774m, having reached £1.4bn in 2022.

“Sharply lower commodity prices and reduced volatility will naturally lower earnings in comparison to 2023 as we return to a more normalised environment,” Centrica’s group CEO, Chirs O’Shea, commented.

“Our performance over the past year has reinforced our confidence in delivering against our medium-term sustainable profit ambitions and continuing to create value for shareholders.”

The total amount of cash that Centrica returned to shareholders topped £800m in 2023, through share repurchases and dividends. The energy giant said its full-year dividend per share was up 33% to 4.0p, while the group’s £1bn share buyback programme is still due to run until July this year.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, commented that Centrica has made “great strides” over the past three years.

“There was a strong recovery in its British Gas energy division, with performance boosted by increased allowances in the UK price cap in the first half. But keep in mind, the majority of these tailwinds should have been accounted for now, and over the medium-term, underlying operating profits from this division are expected to moderate from £751m to around £150m-£250m per year.”

Chiekrie added: “The group has invested heavily in improving its service levels, and it’s beginning to show through lower job rescheduling rates and complaints. Margins here are heading in the right direction and the division's returned to a slim profit.

“With underlying net cash of £2.7bn, equivalent to around 37% of the group’s market cap, the recently reinstated dividend got a large increase, and the buyback programme is on solid ground.”

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