Home » Centrica – earnings upgrade and buyback as prices soar
Centrica expects full year underling earnings per share to be at the top end of the 15.1p – 26.0p range currently expected by analysts. The group’s liquidity has also improved since the half year.
Inflationary and economic conditions have increased the group’s costs, and impacted customer numbers in British Gas Services and Solutions. British Gas Energy volumes have been held back because of unusually warm weather. As a result, underlying operating profit in the Retail business will be lower than current expectations.
Centrica has announced an extra £25m of help for customers, taking the total to £50m.
A share buyback has been announced, with Centrica aiming to buy back up to 5% of its issued share capital, or around £250m.
The group warned of significant short-term uncertainty, including the impacts of weather, commodity prices, a weakening economy and high inflation.
Centrica shares rose 8.2% following the announcement.
Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown:
“The market’s seen a fire lit under its belly where Centrica is concerned, with the British Gas giant boosting full year earnings expectations and embarking on a buyback – its first since 2014. The news comes as Centrica enjoys resilient performances form its gas production and electricity generation arms – energy trading is also seeing performance swell. Higher gas and electricity prices are significant drivers behind the changes.
Centrica is Britain’s biggest household supplier, so if a large portion of customers struggle to pay their bills amid the cost-of-living crisis, current conditions could have an enormous potential impact for the group. So far £50m has been put aside to help those struggling. The recent performance will be used by some to argue that a windfall tax should be levied on energy companies. The situation is certainly a highly sensitive one, and any potential financial knocks brought about by new taxes would need to be carefully managed by Centrica, given what’s at stake for its customers.”