(Bloomberg) -- Centrica Plc will extend its program to return cash to shareholders, before an expected multi billion-pound investment in the UK’s Sizewell C nuclear power station.
The owner of British Gas plans to buy a further £200 million ($257 million) in shares, it said in its earnings statement on Thursday. The new program will add to the already £1 billion that started in November 2022. The stock slumped after investor hopes for more generous rewards were disappointed.
“We view these results as largely solid, albeit its headline share buyback looks a bit light compared to expectations,” Citigroup Inc. analyst Jenny Ping said in a note.
Centrica stepped up pay-outs to its shareholders in 2022 after profits at its British Gas retail energy unit jumped after the energy crisis sent prices soaring. Now, with prices normalizing, the company is sitting on a £3.2 billion pile of cash that needs to be spent.
Shares dropped as much as 9.6% in London, the biggest drop since January 2023.
The utility said it remains committed to increasing dividends raising the interim payment to 1.5 pence per share from 1.33 pence. Centrica previously said it is considering investing in the planned UK nuclear power plant Sizewell C, potentially making it a key stakeholder in the British government-led project.
Centrica is seeking average returns on future investments of 7-10%, according to the statement Thursday.
“An investment decision this year would be dependent upon how the government and the Sizewell company want to move,” Chief Executive Officer Chris O’Shea said on a call with reporters. “We are able to move as quickly as the other parties, but I think we should be realistic that the government have been in office less than three weeks and they need to figure out what they want to do.”
The company appointed Kevin O’Byrne to succeed Scott Wheway as Chair of Centrica from December 2024.
Centrica’s profits have been publicly scrutinized and faced widespread criticism as the country grappled with soring inflation during the cost-of-living crisis. The latest set of results also come after figures showing UK households have accumulated energy debts of £3.3 billion even as bills ease, a reminder that lower power and gas costs haven’t tempered the financial constraints for many households.
Centrica’s adjusted operating profit more than halved to £1.04 billion in the six months through June as energy prices returned to more normal levels after the region’s crisis.
(Updates with further details throughout)
©2024 Bloomberg L.P.
