Centrica pauses buyback as full-year profits drop

(Sharecast News) - Centrica shares slumped on Thursday after the British Gas owner said it was pausing its share buyback programme as it reported a decline in full-year operating profit in a "challenging environment", with guidance from the energy firm also disappointing. In the year to the end of December 2025, operating profit fell to £814m from £1.5bn the year before. Adjusted earnings before interest, tax, depreciation and amortisation dropped to £1.4bn from £2.3bn.

Total group revenue fell 9% to £22.4bn, largely driven by the impact of lower commodity prices, and lower seasonal gas price spreads.

The company's retail segment delivered adjusted EBITDA of £574m and adjusted operating profit of £424m, down from £611m and £458m, respectively.

Meanwhile, UK Home Energy Supply saw adjusted EBITDA fall to £224m from £331m and adjusted operating profit to £163m from £269m, with performance impacted by several factors. Centrica said warmer than normal weather was an £80m headwind, while the shape of the commodity curve also dented profitability.

The company lifted its full-year dividend per share by 22% to 5.5p.

It also said on Thursday that it was pausing its buyback programme as it believes "investment offers an opportunity to create more value for shareholders at this juncture".

For 2026, EBITDA from the retail segment is expected to be within Centrica's range of £500m to £800m. However, the optimisation business is expected to deliver EBITDA of around £250m, below the £300m to £400m guidance range given continued expected headwinds in gas and power trading markets.

It also said the net interest expense is expected to increase to around £100m.

Chief executive Chris O'Shea said: "2025 has been a year of real momentum and we have made bold investments as we continue the fundamental transformation of Centrica. The environment has been challenging, and performance has varied across the business. However, we have remained disciplined, delivering strong operational performance and achieving customer growth across all our Retail businesses simultaneously for the first time in over a decade.

"With major projects like Sizewell C, Grain LNG and our Meter Asset Provider laying the groundwork for more stable and predictable earnings, our long-term opportunities have never been better. Pausing the buyback enables us to prioritise investment that creates lasting value for shareholders, while continuing to deliver the reliable, affordable energy that households and businesses need to power economic growth through the transition."

At 1255 GMT, the shares were down 4.8% at 186.60p.

Dan Coatsworth, head of markets at AJ Bell, said: "If there was any suspicion Centrica's recent run of success was more down to the market backdrop than any master strategy then doubts will only have been solidified by its recent results.

"While the drop in earnings wasn't quite as large as expected, Centrica provided disappointing news on share buybacks which has led the share price to power down in response.

"Centrica, with its healthy exposure to the wholesale market alongside its ownership of the British Gas retail division, benefited from the surge in energy markets in recent years. The momentum has now been lost.

"Centrica is hitting pause on buybacks so it can allocate spending to growth projects including the Sizewell C nuclear power. Executing on these ventures will be challenging and will put a dent in the company's healthy cash position but could deliver more stable earnings if they ultimately prove successful.

"Having been fuelled by a favourable environment since 2022, Centrica must now prove its mettle without a helping hand from rising prices."

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "On the face of it, British Gas owner Centrica's headline numbers were a tough read as energy markets adjusted to more normalised conditions. Lower commodity prices and lower energy price volatility weighed on performance, causing total profits to fall sharply. This was particularly apparent in the group's trading arm, Centrica Energy, which buys and stores gas when prices are low, then waits for higher prices to generate and sell power back to the market, profiting on the difference. But the division fell well short of prior guidance, and performance is likely to remain subdued through 2026.

"Performance in Centrica's retail arm, which includes British Gas, was a bit better as the group saw customer numbers and satisfaction scores continue to trend in the right direction. But warmer-than-normal weather contributed to underlying operating profits in the division slipping 7% to £424 million. Centrica's also investing heavily to build out its renewable energy infrastructure and extend the life of its nuclear assets. Results aren't going to come cheap or quickly, though, with between £600-800 million per year set to be invested in the transition out to 2028, which could put a strain on cash flows if returns aren't as high or quick as planned. As a result, share buybacks have been put on hold to help provide some financial wiggle room."