Centrica shares jump as British Gas owner eyes £1BN cash pile

Centrica shares among top FTSE 100 risers as British Gas owner eyes £1BN cash pile on the back of soaring energy prices

  • Centrica benefits from high energy prices despite squeezed British Gas margins
  •  It now expects to deliver full-year adjusted earnings per share of ‘above 30p’
  • Centrica also now expects 2022 closing net cash to come in ‘above’ £1billion 

Centrica shares were among the biggest risers on the FTSE 100 early on Thursday after the firm revealed it expects to end the financial year with more than £1billion in net cash.

The British Gas owner told investors ahead of its preliminary results in 16 February that its strong operational performance had maintained momentum since its last update in November, while ‘infrastructure asset availability and volumes have remained good’.

Centrica shares were up 5.4 per cent to 96.74p in early trading, having risen by 33 per cent in the last 12 months, before easing back to trade up 4.84 per cent at 96.24p at 1.30pm.

The firm now expects to deliver full-year adjusted earnings per share of ‘above 30p’, a significant jump on the 15.1p to 26p analyst forecast range in early November.

Centrica has benefited from higher energy prices despite squeezed margins within British Gas 

According to UBS, market consensus prior to the trading update pointed to annual earnings per share of 24.7p, with net cash of £1.15billion.

The group’s share price was lifted in November as it Centrica revealed the extent to which it had benefited from sky-high energy prices and launched a £250million buyback scheme.

Performance has been driven by its energy trading arm, and gas production and electricity production assets, which have offset squeezed British Gas margins.

Inflationary and economic pressures have hit its costs and customer numbers in British Gas Services and Solutions, while warmer third-quarter weather also weighed on the retail business.

The company said on Thursday: ‘Centrica has continued to deliver strong operational performance from its balanced portfolio.

‘Infrastructure asset availability and volumes have remained good, and we delivered incrementally strong optimisation performance.

‘As a result, we currently expect to report 2022 full year adjusted earnings per share of above 30p. Cash generation has also been good, and we expect 2022 closing net cash to be above £1billion.’

In addition to the unscheduled trading update, Centrica revealed chief financial officer and executive director Kate Ringrose would step down at the end of February.

Ringrose, who has worked at Centrica for nearly 20 years, will be replaced in both roles by former Group Treasurer at Shell Russell O’Brien from March.

She is expected to stay with Centrica ‘towards the end of 2023’ to ensure ‘an orderly transition’, the company said.

Chief executive Chris O’Shea, Centrica Group Chief Executive, said : ’Centrica has made significant progress over the last three years and is now more efficient and competitive.

‘We have a focussed portfolio of complementary businesses with a transformed balance sheet, and we are now well placed to drive growth across the portfolio and deliver improved shareholder returns.

‘Russell’s broad experience across the energy value chain, including roles as global CFO for both Shell’s Integrated Gas and Retail businesses, will be a huge asset to Centrica as we look to accelerate the creation of shareholder value whilst helping decarbonise the energy system.’

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