Shares in Centrica took a hit on the morning results. What should investors do now?
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The warmer weather might sound like good news to us cold Britons right now, but it’s not all good Centrica (LSE: CNA) shares. Owner British Gas saw operating profit in 2025 fall to £814m – just over half the £1.55bn recorded last year.
The company told us: “Warmer than normal weather was a £80m windfall,” while also talking about, erm, “the shape of the supply curve” and how “impact benefit.“I think that means gas prices have come down a bit. Competition for cheaper deals that lure customers, coupled with a fixed-rate contract discount, hasn’t helped either.
Centrica’s UK home energy business has seen operating profit fall from £269m in 2024 to £163m. On results day morning (19 February), Centrica shares were down 8% in early trading – although at the time of writing they were back in the 6% dip. Is it time for investors to abandon ship as the world warms? Maybe not.
Split up
It’s not all bad news, as Centrica has increased its full-year dividend to 5.5p per share – up from 4.5p in 2024. Whether that was enough covered by benefits is a bit tricky to determine. After exceptional items and adjustments, the company reported a loss per share of 1.5p. But excluding those items, basic earnings per share came in at 11.2p. Total dividends paid rose from £219m last year, to £237m this year.
Analyst forecasts have profits growing significantly over the next few years as well, supported by a return to earnings growth following a several-year slump. But we will have to wait and see if they lower their hopes regarding these latest results.
Looking ahead, Centrica talks about “raising sustainable wages, maintaining a strong balance sheet,” and “to deliver a continuous dividend.” A progressive dividend is one of the first things I look for when evaluating a potential acquisition. But that said, 5.5p for 2025 only represents a 2.8% yield on the previous day’s closing price.
However, the company said it is continuing “to expect a profit cover of about 2x by 2028.” I would never rule out Centrica as a long-term income investment.
What’s next?
To put more statistics into its view, management spoke “adjusted EBITDA of £1.7bn” in 2028, it was rebroadcast “the belief is that we can deliver more than this.” They also said “we expect to generate adjusted EBITDA of £2bn” in 2030.
In a recent update, Centrica said “Unexpected regulatory and political opinion, including debate on policy and policy.” US energy policy may have taken the focus off the previous drive for renewables. But will it come back to bite the hydrocarbon companies? I’d say that’s inevitable, although the real question is when. Centrica’s move to nuclear power should help alleviate these fears to some extent.
For me, there’s too much uncertainty — volatile energy markets, government regulation, long-term energy politics — to buy. But for those who see a few good years yet to profit from hydrocarbons, I think Centrica shares should be considered.
