Business Irish

Saturday 17 March 2018

Bord Gais says pre-tax profits down 24pc but dividend higher

Thomas Molloy

Thomas Molloy

BORD Gais, which is preparing to hike energy bills for home owners this autumn, said profits fell last year but it paid a larger dividend to the State.

Bord Gais said profits before income tax dropped 24pc as the company invested in large infrastructure projects including the Whitegate power plant in Cork.

The company nevertheless paid a dividend of €33.1m to the Exchequer, or 10pc more than the previous year.

The regulator has already agreed that gas prices will rise by a double-digit percentage in the autumn as international gas prices jump and the euro falls against the dollar.

The price hikes follow 22pc increases last year as energy prices began rising after three years of relative stability.

More and more gas has to be imported as demand rises and the Kinsale field slowly declines. Only 7pc of gas used in Ireland comes from Irish waters compared with 9pc five years ago.

The company's annual report, published yesterday, said prices jumped last year as the Arab Spring and the conflict in Libya pushed up oil prices. Other factors pushing up prices were the tsunami in Japan which damaged nuclear power stations and pushed up demand for fossil fuels, cold weather and lower production in UK gas fields as gas runs out.

Rising prices combined with the economic crisis pushed many Bord Gais customers into arrears, the company said. Bord Gais helped more than 100,000 customers with bills last year and agreed 82,000 repayment plans with customers in trouble compared with around 31,500 the previous year.

The new repayment plans included the installation of 21,600 free pay-as-you-go meters.

Around 10pc of customer payments were more than 60 days late at the end of the year.

While the pay-as-you-go meters ensure that no customer has to be cut off, the utility still lost 13pc of its residential gas customers as competition and the recession took its toll.

The company now has 456,000 residential gas customers and 12,000 business customers following a 17pc decline.

Bord Gais is at the beginning of the biggest change in its history as Energy Minister Pat Rabbitte prepares to sell off the residential division for an estimated €1.5bn while the rump of the company will take responsibility for the nation's water supply currently divided between 36 local authorities.

The sale of Bord Gais Energy is expected to be completed by late next year through a share offering or some sort of trade sale which would see the company sold to a larger gas company in the UK or further afield.

The company has already transformed itself by entering the electricity market and expects to produce a third of all the power it generates from windmills, which is enough to power 180,000 homes.

That figure will rise to 50pc when the seven or eight projects the company has on its books are completed over the next two years.

Bord Gais said turnover rose 5pc to €1.61bn last year but profit before income tax dropped by a quarter to €94m as the company invested in large infrastructure projects, including the Whitegate power plant in Cork.

Earnings before interest and tax increased by 4pc to €343m. Net debt rose to €1.93bn last year from €1.86bn the previous year.

Irish Independent

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