Centrica Shares Tumble as Buyback Pause Overshadows Dividend Hike

Shares of Centrica (CNA.L) declined sharply early on Thursday, plummeting over 8%, as investors reacted negatively to the company's decision to pause its share buyback program.

This move overshadowed an otherwise positive set of full-year 2025 results, which included a substantial dividend increase and strategic progress in key areas.

Despite a challenging market environment, Centrica reported resilient earnings. However, adjusted EBITDA fell to £1.4 billion, down from £2.3 billion in 2024, but above the company-compiled consensus estimate of £1.3 billion. Adjusted operating profit also decreased to £0.8 billion from £1.6 billion.

Basic earnings per share (EPS) also saw a decline, falling to 11.2p from 19.0p the previous year, and in line with the consensus estimate. Statutory figures further reflected the downturn, with a statutory basic EPS loss of 1.5p compared to a 25.7p profit in 2024.

The company highlighted strong strategic advancements, particularly significant investments in the Sizewell C nuclear power station and the Grain LNG terminal. These investments are expected to contribute to future profitability as Centrica's transformation program ramps up. Capital expenditure significantly increased to £1.2 billion, driven by these strategic initiatives.

Despite the earnings dip, Centrica increased its full-year dividend per share by 22% to 5.5p. In 2025, the company returned £1.1 billion to shareholders, including £0.8 billion through share buybacks. The pause in buybacks, however, appears to have triggered the negative market reaction, signaling a potential shift in capital allocation strategy.

Centrica is targeting £1.7 billion in EBITDA by the end of 2028, with growth projected to £2.0 billion in 2030. This growth is expected to be supported by the ongoing transformation program, further investments, and anticipated nuclear life extensions. The company's strategic focus is on building a portfolio with stable earnings and upside opportunities.

Key drivers for the company's future include strategic investments in Sizewell C and Grain LNG, which are expected to provide stable, regulated earnings. The ongoing transformation program aims for cost efficiencies and an improved customer experience, while the company has seen customer growth across all its Retail businesses for the first time in over a decade.

CEO Chris O’Shea stated, “Pausing the buyback enables us to prioritize investment that creates lasting value for shareholders, while continuing to deliver the reliable, affordable energy that households and businesses need to power economic growth through the transition.”