- 2022 earnings to be a top end of expectations
- £250 million buyback unveiled
- Shares up 20% over last month
Energy firm Centrica (CNA) will have done nothing to quieten talk of windfall taxes as it guided for profit at the top end of expectations and unveiled a £250 million share buyback.
The unscheduled trading update was received warmly by investors with the shares up 7.7% to 83.5p and extending their gains over the last month to more than 20%.
The company is now expecting 2022 adjusted earnings per share to come at the top end of the analyst range of 15.1p to 26p. This compares with just 4.1p in 2021.
This bullishness comes despite some pressure on its British Gas retail operation from mild October weather impacting profit and volumes and the impact of inflation on its cost base.
The company also expressed some concern about an increase in bad debts in this part of the business as some households struggle to keep up with soaring bills.
Centrica has set aside a further £25 million to help support customers, taking its total allocation in this area to £50 million this year.
‘AWARE OF REPUTATIONAL ISSUES’
The energy production and marketing operations are what have really underpinned Centrica’s strong trading. The company has also announced the reopening of the Rough gas storage facility in October - making a contribution to the UK’s energy security.
AJ Bell investment director Russ Mould commented: ‘Centrica is concerned about the impact of some customers being unable to pay their bills and it is clearly aware of the reputational issues as it puts more money into a customer support fund.
‘It may not feel like it just now with temperatures regularly in double digits nearly halfway into November, but winter is coming and the pressures are only going to get more acute.
‘Centrica will be nervously awaiting the outcome of the Autumn Statement a week today where there may an extension of the existing windfall tax.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Tom Sieber) and the editor (James Crux) own shares in AJ Bell.
