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(Bloomberg) — Centrica Plc shares fell the most in about 20 months after profit slumped 40%, with the company blaming difficult market conditions for its trading unit and mild weather that damped demand and prices.
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The company halted buybacks to refocus on its investment program. Even though Centrica had previously flagged the move, reaffirming its 2026 targets will prompt scrutiny over where incremental growth will come from, Citigroup Inc. analyst Jenny Ping said.
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Last year was tough for energy traders as US tariff policy and conflict in the Middle East created volatility that was decoupled from supply-and-demand fundamentals. Utilities and commodity houses saw profits fall from the bumper levels enjoyed during the energy crisis that followed Russia’s invasion of Ukraine.
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Warmer than normal weather also impacted profitability, particularly at its household supply business, the firm said. Above-average temperatures across the northern hemisphere lowered demand for gas for heating.
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The lower profits, combined with the pause in buybacks saw shares slump as much as 9.6%, the most since July 2024, in London before paring back some losses.
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The company’s trading business grappled “with short-term geopolitical news flow and speculative capital disrupting fundamentals,” according to a statement. Centrica Energy, which includes the trading business, saw adjusted ebitda almost half from the previous year.
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“But we’ve been steadily reducing risk across the portfolio, simplifying the business, recycling capital from non-core assets and improving operational performance,” Centrica’s Chief Executive Officer Chris O’Shea said on a media call.
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Centrica also reported a full-year loss from its Rough gas storage site — the biggest in the UK.
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The utility has been in lengthy discussions with the state on an estimated £2 billion overhaul to expand and redevelop Rough for gas and hydrogen storage. It said Thursday that the plan’s progress would depend on securing a “suitable” regulatory mechanism.
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“I am encouraged by the conversations that we have with government,” O’Shea said, without providing a timeline on when a decision would be made.
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Centrica has now committed £3 billion of the £4 billion investment program, after it took stakes in key UK energy assets like the Sizewell C nuclear plant and the Grain LNG terminal. Moving ahead, it said it plans to continue investing around £600 million to £800 million beyond 2028.
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The owner of British Gas posted earnings before interest, taxes, depreciation and amortization of £1.42 billion ($1.9 billion) for 2025, according to a statement on Thursday.
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(Updates with shares, CEO comments.)
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