Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “On the face of it, British Gas owner Centrica’s headline numbers were a tough read as energy markets adjusted to more normalised conditions.
“Lower commodity prices and lower energy price volatility weighed on performance, causing total profits to fall sharply.
“This was particularly apparent in the group’s trading arm, Centrica Energy, which buys and stores gas when prices are low, then waits for higher prices to generate and sell power back to the market, profiting on the difference.
“But the division fell well short of prior guidance, and performance is likely to remain subdued through 2026.
“Performance in Centrica’s retail arm, which includes British Gas, was a bit better as the group saw customer numbers and satisfaction scores continue to trend in the right direction.
“But warmer-than-normal weather contributed to underlying operating profits in the division slipping seven per cent to £424 million.
“Centrica’s also investing heavily to build out its renewable energy infrastructure and extend the life of its nuclear assets.
“Results aren’t going to come cheap or quickly, though, with between £600-800 million per year set to be invested in the transition out to 2028, which could put a strain on cash flows if returns aren’t as high or quick as planned.
“As a result, share buybacks have been put on hold to help provide some financial wiggle room.”
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