The British Gas owner Centrica has revealed plans to hand more money back to shareholders, as stronger profits from high electricity and gas prices help offset poor performance of its retail arm.
In an unscheduled trading update on Thursday, the company said it expected profits to be at the top end of analyst forecasts, which are predicting earnings of about 15.1p to 26p a share for 2022.
It follows “strong operational performance’” from its electricity generation and gas production business, as well as its marketing and trading arm, which have helped make up for tougher conditions for its retail operations that serve households and businesses across the UK and Ireland.
Centrica is now planning to buy back up to 5% of its shares, worth about £250m, after a pledge to return more cash to investors earlier this year.
It said the decision reflected the company’s “recent performance and outlook, together with the work undertaken in recent years to strengthen the balance sheet and ensure appropriate liquidity”.
Shares rose more than 8% on Thursday morning, making Centrica the top riser on the FTSE 100.
However, the energy company warned surging inflation and “economic pressures” had increased its costs and hit customer numbers across its retail arm, while warmer warm weather in October hurt profits. “As a result, we expect adjusted operating profit in our retail division to be lower than current expectations,” Centrica said.
The company said there was still a risk that the retail division would be affected by further fluctuations in energy prices, as well as customers struggling to pay their bills over the coming months.
“There are significant uncertainties that remain over the remaining two months of the year, including the impacts of weather, commodity price movements, asset performance and the potential consequences of a weak economy and high inflation on commercial performance in British Gas Services & Solutions and bad debt in our energy supply activities.”
Centrica said it was “acutely aware” of the challenges facing customers, and pledged to offer a further £25m to support those who need help, bringing total voluntary support to £50m this year.
That is meant to add to the government’s energy bills support scheme, which is cutting household energy bills by about £67 a month between October and March.
