Energy giant Centrica has increased full-year operating by 40% to £1.95 billion. With a five-fold increase in British Gas earnings, the utilities group looks set for a strong 2008.

British Gas, a division of Centrica, increased its annual profit at its residential arm to £571 million pounds. The news comes just weeks after it imposed double-digit energy bill hikes on around 13 million customers. Without this hike, Centrica said the division would be loss-making.

The residential supply arm coaxed back 200,000 customers in the second half of the year, despite difficult market conditions.

Centrica said its record profits haul followed a 'year of two halves' for its residential business.

The last six months of the year fell far short of the £533 million seen in the first half amid soaring wholesale costs.

The group trimmed its British Gas residential workforce by 2,000 last year and said up to another 1,000 roles will go in 2008 as it looks to save a further £60 million.

The jobs reduction will largely hit its call centre operations, but Centrica stressed it hoped to achieve all of the decrease by staff turnover and not redundancies.

The Services operation saw operating profits rise by 48% to £151 million while Centrica's Storage business posted a record £240 million in profits, up from £228 million in 2006.

In the upstream sector, Centrica's gas production volumes increased by 18%, with upstream investment up 71% to £801 million.