- Results beat expectations as buyback unveiled
- 2025 outlook unchanged
- Shares gain 12% over the past year
Shares in Centrica (CNA) were in demand on better-than-expected results and the unveiling of a share buyback.
The stock was up more than 10% to 149p in morning trading despite a fall in EBITDA (earnings before interest taxation depreciation amortisation) to £2.3 billion for the full year ending 31 December 2024 compared to £3.5 billion in 2023 as energy markets normalised.
Markets were cheered by the announcement of a £500 million share buyback to be completed by the end of 2025. The FTSE 100 company also announced a 13% increase in the full-year dividend per share to 4.5p.
PENSION REVIEW FINISHED AHEAD OF DEADLINE
Separately the company said it had finished the triennial review of its UK defined benefit pension schemes ahead of its 30 June deadline.
Centrica agreed with the pension scheme trustees a revised technical provisions deficit of £504 million as of 31 March 2024 compared to an initial higher figure of £944 million at the previous March 2021 review.
As part of the 2024 review, the company has agreed with the pension scheme trustees annual deficit payments of approximately £140 million a year until 2027.
This compares to approximately £175 million a year under the previous agreement.
IRISH EXPANSION AND BRAZILIAN LNG AGREEMENT
The company announced the next phase of its investment programme in the Irish power market by increasing its flexible electricity generation capacity by 50% to one gigawatt.
In January this year, Centrica’s subsidiary Bord Gais Energy secured a 10-year capacity market contract to deliver the 33 megawatt OCGT (Open Cycle Gas Turbine) power station.
Centrica has also entered into a major SPA (sale and purchase agreement) with Brazilian integrated oil & gas company Petrobras (PBR:BCBA).
The contract provides for the purchase by Petrobras of 0.8 million tons per annum (MTPA) of LNG for 15 years, starting in 2027.
The agreement comprises approximately 30% of Centrica's US portfolio and will be sourced from Centrica’s Sabine Pass and Delfin supply agreements.
WHAT DID THE CEO SAY?
Chris O’Shea: ‘2024 was a good year for Centrica as we made further operational improvements and ramped up our investment programme. This has resulted in happier customers and more innovative propositions, but there is so much more we can do.
‘Looking ahead, I want to see Centrica continue to focus on the areas that make the biggest difference. 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 our investments during 2024 demonstrate our ability to invest responsibly and profitably.’
The company’s outlook for 2025 however remains unchanged consistent with its December trading statement.
Centrica added the usual uncertainties remain including weather, commodity prices, regulation, and government policy.
A TOUGH ACT TO FOLLOW
Russ Mould, investment director at AJ Bell said: ‘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.
‘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.
‘While it has had the odd brush with controversy over the significant profits it enjoyed after the energy price shock which followed Russia’s invasion of Ukraine, Centrica does seem to have fixed the roof while the sun was shining, making the business more resilient and well-resourced than it was before 2022.’
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DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Tom Sieber) own shares in AJ Bell.
