ii view: Centrica ends share buybacks but still optimistic

Full year results to 31 December

• Adjusted profit (EBITDA) down 39% to £1.42 billion 
• Final dividend of 3.67p per share
• Total dividend for the year up 22% to 5.5p per share
• Adjusted net cash of £1.5 billion, down from £2.9 billion a year ago

Guidance:

• Expects profits (EBITDA) of around £1.7 billion in 2028
• Expects profits (EBITDA) of around £2 billion in 2030

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.”

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ii round-up:

British Gas owner Centrica (LSE:CNA) today pointed to potentially flat profits in 2026, with share buybacks now halted in favour of ramped-up investments in areas such as nuclear power.

Adjusted full-year profit (EBITDA) fell 39% in 2025 from £1.42 billion a year ago, hindered by factors including challenging market conditions for gas and power trading and nuclear outages. Higher than expected interest costs of £100 million mean 2026 profit could be stuck at around £1.4 billion, although ongoing investments and cost cuts expected to drive profit as high as £2 billion in 2030. 

Shares fell 6% in UK trading having come into these latest results up by just over a quarter last year compared with the FTSE 100 index, which rose by just over a fifth in 2025. Gas and renewable power generator SSE (LSE:SSE) climbed by just over a third. 

As well as supplying energy, Centrica also owns oil and gas production assets, along with energy storage and trading businesses and a 20% interest in the UK’s portfolio of existing nuclear power stations.

A proposed final dividend of 3.67p per share, and payable to eligible shareholders on 14 May, brings the total payment to 5.5p per share in 2025 – an increase from 4.5p the yearbefore. 

Share buybacks for 2025 totalled £2 billion. Centrica’s year-end adjusted net cash of £1.5 billion was down from £2.9 billion at the end of 2024. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results, flagging the company as a ‘top pick’ as well as a target price of 210p per share.

ii view:

Headquartered in Berkshire, Centrica employs around 21,000 people including approximately 7,000 gas boiler engineers. The group operates across three divisions: Retail covers its British Gas and Bord Gáis supply businesses in the UK and Ireland; Optimisation serves business customers as well as taking in its energy trading business including Liquefied Natural Gas (LNG); the Infrastructure division includes its gas and nuclear energy production businesses.   

For investors, the weather and its unseasonal swings can cause uncertainty over customer energy demand at its supply business. Volatile energy prices can be bad for the trading business, with operational issues potentially complex given exposure to nuclear energy and required investments sizeable. Changes by the regulator and the government can impact, while a forecast price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap. 

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On the upside, strong cashflows left Centrica with adjusted net cash of £1.5 billion late December, supporting both shareholder returns and required investments. A transformation programme at the company over recent years has looked to offer a more stable platform to build on and includes planned cost cuts of £0.5 billion in 2026. The group’s diverse businesses mean tough conditions for one area can be countered by strengths in another, while management continues to assess and invest in energy transition opportunities such as solar farms and carbon capture.  

In all, Centrica’s target of a more stable platform in profit terms has yet to be achieved and offers room for caution. That said, ongoing investment, exposure to energy transition and a prospective dividend yield in the region of 3% may keep investors onside.   

Positives

• A diversity of businesses
• Net cash held

Negatives

• Subject to government scrutiny 
• The weather can impact

The average rating of stock market analysts:

Buy