Energy firms post record profits as households struggle with soaring bills

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 Energy firms post record profits as households struggle with soaring bills
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Highlights:

  • While soaring bills are troubling Brits, they have boosted the profits of energy firms.
  • Shell and Centrica reported their results on Thursday, announcing huge gains.

Millions of Brits are troubled by the soaring energy and fuel bills. The Russia-Ukraine conflict pushed up global oil and gas prices due to supply disruptions and economic sanctions, which in turn had knock-on effects on other essentials like groceries. The prices are set to climb again in October when the energy cap revision takes place.

While most businesses were hit due to the disruptions and high prices, it turned out to be really good for a few. Energy firms were the major beneficiaries of the rising costs, with many posting record profits.

Energy firms post record profits as households struggle with soaring bills

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Let us take a look at two such companies which reported strong growth in revenues.

Shell Plc (LON: SHEL)

British oil and gas giant Shell posted profits worth US$11.5 billion (£9.5 billion) in the second quarter of 2022, beating analysts' expectations of US$11 billion. This is also considerably higher than the record profits of US$9.13 billion that Shell revealed in the previous quarter. Moreover, the gains came despite the company taking a £3.1 billion hit due to its exit from Russia. 

The company's adjusted EBITDA for Q2 stood at US$23.1 billion, 22% more than Q1's US$19 billion.

Shell also announced the commencement of a share buyback program worth US$6 billion, which will cover an aggregate contract term of about three months. The company expects it to be completed before it announces the results for the third quarter.

Shares of the energy firm were trading 1.63% higher at GBX 2,152.00 as of 10:54 am GMT+1 on Thursday. The company presently holds a market cap of £155,550.12 million, and it has provided shareholders with a decent return of 53.71% over the past one year. The year-to-date return is 32.57%, while the EPS stands at 2.59.

Centrica Plc (LON: CNA)

Another energy firm that posted results on Thursday is Centrica. The British Gas owner reported a five-fold rise in its operating profits for the six months to 30 June. The FTSE 100-listed company saw its operating profits rise to £1.3 billion, a substantial increase over the £262 million it reported in the first half of 2021.

Due to the high energy bills and estimates that they could reach £3,000 annually by the end of this year, the firm also expects a rise in its profits for the whole year.

Centrica also reinstated its dividend payout of 1p per share this year, which was halted three years ago.

Shares of the company, however, failed to mirror its H1 performance. As of 11:13 am on 28 July, the stock price was hovering at GBX 88.60, down 2.62%, after opening at GBX 93.06. The company has a market cap of £5,374.71 million, and its share value has appreciated by a whopping 84.30% over the past 12 months. The year-to-date returns have also been decent at 23.85%.

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