Gas and electricity group PowerGen saw half-year profits lose spark today after being hit by lower profits from its electricity business.

The group said pre-tax profits for the half-year to July 2 fell to £241 million from £289 million last time, partly due to lower returns from its electricity wholesale, trading and distribution divisions.

PowerGen added that a sharp decline in electricity prices in the first four months of this year in the UK would begin to have an effect in the fourth quarter of this year.

And selling two power stations - its Fiddler's Ferry and Ferrybridge sites - in 1999 also reduced power output in the UK.

However the group said turnover had increased to £2.05 billion from £1.9 billion due to increased turnover both in its retail business, which supplies gas, electricity and telecoms and in its international division. And it added it was making "good progress" on completing its massive £2 billion takeover of US electricity and gas group LG&E.

The group announced the cash bid in February, which would give it a vital foothold in the US power market.

The deal, which will see PowerGen take advantage of the deregulated US market, is dependent on US approval and is expected to be cleared by the end of the year.

PowerGen added it was on track with its sales of selected assets in the UK and overseas and expected to make announcements on these sales later this year.