* Says plans to deliver improved earnings growth in 2012
* Says focus remains on growing the upstream business
* Adjusted operating profit up 1 pct to 2.42 bln stg
* Upstream gains offset by mild weather, lower power use
* Shares rise 0.9 percent
By Adveith Nair
LONDON, Feb 23 British utility Centrica
expects to deliver improved growth this year helped by
higher profits from its upstream oil and gas business, after
lower consumption at its supply business pegged back growth in
Centrica, which owns Britain's biggest household energy
supplier British Gas, on Thursday said full-year adjusted
operating profit was flat year-on-year as higher commodity
prices and mild weather drove down power use in Britain.
Higher commodity prices, however, benefited the company's UK
upstream oil and gas business, where profits grew 33 percent.
That unit will be key to the company's plans to deliver improved
year-on-year earnings growth in 2012, analysts say.
Centrica, already the third largest producer of gas on the
UK continental shelf, said it plans to increase upstream UK gas
and oil production by more than 25 percent this year.
"In our upstream UK business, we will progressively benefit
from the higher wholesale commodity price environment," the
company said. "We will also benefit from the recently acquired
gas and oil assets in the North Sea."
Centrica added that its focus would remain on growing the
upstream business through acquisition and organic development.
The company, which spent 1.6 billion pounds in 2011, said it
expects to invest 1.4 billion in this year, with half of that on
the upstream gas and oil business.
Shares in the company, which have dropped more than ten
percent in the past year, were up 0.89 percent at 296.10 pence
at 0956 GMT.
"Analysts are expecting our earnings to go up more in 2012
than they did in 2011," Chief Executive Sam Laidlaw told
reporters after reporting a 2.4 percent rise in full-year
earnings per share. "The outlook is positive in that sense."
The company is expected to report earnings of 27.59 pence
per share in 2012 according to a Thomson Reuters I/B/E/S poll of
analysts, up more than 8 percent from the 25.8 pence per share
profit it reported in 2011.
Full-year adjusted operating profit at Centrica was largely
flat at 2.42 billion pounds ($3.79 billion), broadly in line
with consensus estimates. Analysts expect this to rise 5 percent
to 2.54 billion pounds in 2012.
BRITISH GAS PROFITS FALL
Profit at the company's downstream supply business dropped
17 percent, hurt primarily by higher gas prices, and mild
weather, which led to a 21 percent dip in average household gas
consumption and a 4 percent fall in electricity use.
"We had high gas and oil prices driven by the Arab spring
and events in Japan," Laidlaw said. "The other big factor was
that we were going from one of the coldest years on record in
2010 to one of the warmest, which has an impact on consumption."
The company said the number of UK residential customer
dropped 1 percent, or nearly 100,000, to 15.9 million.
Similarly, Spain's largest power utility Iberdrola
< IBE.MC > on Thursday posted a 2.3 percent decline in
full-year net profit, also depressed by weak power demand in
some of its core markets and rising commodity prices. [ID:
Centrica, among the first of the 'big six' UK suppliers to
cut prices, warned however that the longer term trend in
wholesale energy prices and non-commodity costs "remains
UK energy regulator Ofgem had said earlier this week the
country's six dominant utilities should auction off a quarter of
their power supplies to encourage the entry of independent
suppliers and in a bid to lower retail energy prices.