Centrica Shares Slide Despite Severn Acquisition as Retail Outlook Disappoints

Centrica (LSE: CNA) shares fell sharply on Thursday, closing down 5.16% at 198.7p after the British Gas owner used its Annual General Meeting to warn that full-year Retail energy earnings would come in at the lower end of its guided range, rattling investors who had hoped for a more confident outlook.

At the AGM, management reaffirmed guidance of £200m–£400m for Retail EBITDA but signalled the business is trending toward the bottom of that band, which is a disappointment given the energy supplier had posted a strong performance in its Infrastructure division, where upstream gas and power assets continued to outperform expectations.

The session also brought news of a significant strategic move. Centrica announced the acquisition of Severn Power, an 850-megawatt combined cycle gas turbine (CCGT) plant located in South Wales, from Calon Energy Group for approximately £370 million.

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The deal is intended to strengthen Centrica’s flexible generation capacity as Britain grapples with grid reliability challenges and the ongoing energy transition.

Despite the strategic rationale, analysts were cautious. Aarin Chiekrie, Equity Analyst at Hargreaves Lansdown, noted that “the Retail division is under a bit of pressure, with warmer weather and financially struggling customers called out as reasons for soft profits in the early months of the year.”

However, he added: “The longer-term picture for Centrica remains favourable, helped by its ongoing investments in the business and the expected life extension of its nuclear fleet. There’s also a sizable cash pile to cushion any further bumps in the road.

“But a lot of these strengths now look priced into the valuation. Warmer weather and consumer finances coming under pressure are both unfavourable forces, and remain outside of the group’s control.”