UPDATE:Centrica First-Half Operating Profit Up On Buys,Weather

28th Jul 2010 09:55

(Adds analyst comment, detail.) By Selina Williams Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. utility Centrica PLC (CNA.LN) Wednesday posted a 65% rise in adjusted operating profit for the first half of 2010, on cold weather and as profits from its retail energy supply business offset lower commodity prices, and said results for the year would be in line with expectations. The strong first-half performance reflected first-time contributions from the Venture and British Energy acquisitions as well as the newly commissioned Langage gas-fired power station. The period also included one of the coldest winters on record. "Centrica has performed well in the year to date, with strong results underpinned by improved operational performance in each area of our business," said Centrica Chief Executive Sam Laidlaw. Hargreaves Lansdown Stockbrockers analyst Keith Bowman said the results reflected Centrica's transformation from a supply business to a fully integrated production and supply company. "The additional stability in earnings which this strategy aims to bring is already evident, with downstream supply services profitability offsetting the effect of lower commodity prices on the expanding upstream production business," Bowman said. Centrica said full-year results were expected to be "heavily weighted" toward the first half, as they typically are, but in line with current market expectations for the year. Analysts are currently forecasting full-year adjusted operating profit of GBP2.2 billion, according to a consensus survey of 20 analysts provided by the company. Separately, Centrica said it sees considerable growth opportunity for its business in the U.K. and North America. In North America, where the company has said it wants to double the size of its business over the next three to five years, Centrica aims to grow existing business as well as make acquisitions. "We will therefore consider opportunities upstream, in gas production and power generation, and downstream, to build on our existing positions in key deregulated markets," the company said in a statement. In 2010, Centrica expects to invest GBP1.2 billion in new sources of gas and power as part of its commitment to invest GBP15 billion by 2020 to secure energy supplies for the U.K. Group adjusted operating profit, or earnings before interest and tax, were up 65.4% at GBP1.563 billion from GBP945 million last year. The adjusted operating profit figure was 14.1% above expectations for GBP1.37 billion in a Dow Jones Newswires poll of three analysts. Centrica posted an almost seven-fold increase in net profit attributable to equity shareholders of GBP1.379 billion for the half-year ending June 30 versus GBP202 million for the same period in 2009. Group revenues rose 0.4% to GBP11.71 billion from GBP11.66 billion in the first half of 2009. Analysts said the results were mostly in line with views and expected to be neutral for share prices. "The market expected good results and they delivered them," said Citigroup analyst Peter Atherton. At 0852 GMT, Centrica shares were down 6 pence, or 1.9%, at 302 pence, underperforming the broader FTSE 100 index. Company Web site: http://www.centrica.com -By Selina Williams, Dow Jones Newswires; +44 207 842 9262; [email protected] (END) Dow Jones Newswires July 28, 2010 04:55 ET (08:55 GMT)