Centrica shares surge as British Gas owner hikes dividend
Shares in Centrica jumped nearly 10 per cent in early deals this morning after the owner of British Gas beat earnings estimates and hiked its dividend.
The FTSE 100 energy firm reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of £2.3bn for the 12 months ended 31 December. While this was down from last year’s £3.5bn, it was well ahead of analyst expectations of £1.6bn.
Adjusted earnings per share came in at 19p, ahead of prior forecasts of 18.62p.
Off the back of the figures Centrica on Thursday said it planned to hike its dividend by 13 per cent to 4.5p and extended its existing share buyback programme by £500m.
“2024 was a good year for Centrica as we made further operational improvements and ramped up our investment programme,” chief executive Chris O’Shea said.
“This has resulted in happier customers and more innovative propositions, but there is so much more we can do.”
The owner of British Gas also reaffirmed its targets for the years ahead. According to its annual report, the energy giant is looking for a £1.6bn run-rate of EBITDA by the end of 2028 and intends to increase 2025 dividend per share to 5.5.
“Looking ahead, I want to see Centrica continue to focus on the areas that make the biggest
difference,” O’Shea said.
“We are investing in the energy transition, ensuring our customers have the energy they
need, when they need it at a price they can afford.
“Everything we do must deliver an appropriate return, and and our investments during 2024 demonstrate our ability to invest responsibly and profitably.”
The results did not mention investment plans for Sizewell C, which many analysts had hoped for before Thursday.
The final investment decision on Sizewell is due by May and UBS has said it expects Centrica’s cash commitment will not go higher than £2bn for a 10 to 15 per cent stake.
“A bumper 2023 was always going to be a tough act to follow for Centrica and, sure enough, profit and revenue were sharply lower in 2024 as energy markets normalised and a one-off recovery of costs in its British Gas division didn’t, as implied, repeat,” Russ Mould, investment director at AJ Bell, said.
“However, it’s all about expectations for the market and Centrica came in ahead of what had been pencilled in, which, along with retaining its 2025 forecast, was sufficient to get investors energised.
“The company is still throwing off a decent amount of cash and has a strong balance sheet which has allowed it to serve up further generous returns to shareholders.”