Centrica Suspends Share Buyback Following Sharp Profit Decline
The owner of British Gas, Centrica, has announced a pause in its share buyback program after reporting a significant drop in full-year profits. Adjusted earnings for 2025 fell to £1.42 billion, a decrease of nearly 39% from the previous year's £2.3 billion. This decline comes as the company faces a challenging operational environment, marked by milder weather conditions that led to reduced household consumption of gas and electricity.
Impact of Weather and Investment Strategies
British Gas experienced a decline in adjusted profits, which dropped to £309 million from £364 million, despite a 1% growth in its customer base, now totaling almost 8 million accounts. The milder weather across the year meant that households used less energy, directly impacting the supplier's revenue. Chris O'Shea, Chief Executive of Centrica, commented on the situation, stating, "The environment has been challenging, and performance has varied across the business." He emphasized that pausing the buyback allows the company to prioritize investments that create lasting value for shareholders while ensuring reliable and affordable energy supply.
Market Reaction and Broader Business Performance
Following the announcement, shares in Centrica fell by almost 8% in early trading, making it the top faller on the FTSE 100 index. The company's energy trading profits were adversely affected by geopolitical volatility, and outages in the UK's nuclear reactor fleet further eroded earnings. However, profits across the wider retail business remained stable at £557 million, supported by higher earnings from energy services and business solutions divisions.
Strategic Investments and Future Outlook
Centrica is currently engaged in several multibillion-pound investments aimed at strengthening its infrastructure and market position. Key projects include the new Sizewell C nuclear plant in Suffolk and the acquisition of Europe's largest gas import terminal at Grain LNG for £1.5 billion. Additionally, the company plans to invest billions in its gas storage facility at Rough. These spending initiatives come at a time when profits in the energy retail sector have declined, despite growth across various retail businesses for the first time in over a decade. The pause in share buybacks is intended to support these strategic investments, focusing on long-term growth and stability in the evolving energy market.
