Centrica was one of the companies that benefited massively from surging fossil fuel prices as war erupted in Eastern Europe. Those days seem a long time ago now.
Shares fell 9% on Thursday after the group reported a 50% decline in operating profit in 2025 and the eradication of free cash flow as lower fuel prices rocked the business’s trading unit.
“On the face of it, British Gas owner Centrica’s headline numbers were a tough read as energy markets adjusted to more normalised conditions,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“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.”
The British Gas owner posted adjusted EBITDA of £1.4bn for the year ended 31 December 2025, down sharply from £2.3bn in the prior year, while adjusted operating profit fell to £0.8bn from £1.6bn. Adjusted basic earnings per share came in at 11.2p, down from 19.0p in 2024.
Centrica increased its full-year dividend per share by 22% to 5.5p and completed a £2bn share buyback programme, returning a total of £1.1bn to shareholders during the year, including £0.8bn through buybacks.
However, the company has now paused further share buybacks to prioritise investment spending. This will be a kick in the teeth for investors, but the lack of free cash flow would have left the group with little choice.
Chris Beauchamp, Chief Market Analyst at IG, said: “Centrica’s need for cash has been underlined by its decision to suspend the buyback to focus on investments and infrastructure, but the shares had arguably run too far ahead in the short-term anyway.
“In a world where investors are focusing more and more on companies that will benefit from the infrastructure boom, Centrica’s uncertain outlook makes it less attractive, putting the share price gains of recent years under pressure.”