Centrica, the owner of British Gas, has reported a sharp decline in annual earnings, with underlying operating profits falling to £814 million in 2025 from £1.55 billion the previous year. The company described the trading environment as 'challenging', citing an £80 million hit from warmer weather and a shift by customers to cheaper fixed-price tariffs.
Profits in the household energy supply business slumped 39% to £163 million, as milder temperatures led to reduced heating demand. Centrica noted that the proportion of customers on fixed-price deals rose to 32%, up from 25% at the end of 2024, which eroded margins compared with standard variable tariffs.
Shares in the firm fell 8% after it announced a pause in share buybacks to prioritise investment. Chief executive Chris O'Shea said the decision would allow the company to fund projects such as its £1.3 billion stake in the Sizewell C nuclear plant, with at least £700 million of additional investment planned for 2026.
Despite the profit decline, Centrica grew its UK and Ireland household customer base by 1% to 7.96 million, marking the first increase in over a decade. However, this was partly due to taking on 91,000 customers from failed suppliers Rebel Energy and Tomato Energy, offsetting a small underlying decline. The company was overtaken by Octopus Energy as the UK's largest household supplier last year.
Centrica's Rough gas storage facility under the North Sea performed better than expected, with losses lower than feared and a forecast of roughly breaking even in 2026. The government is expected to decide on the future of gas storage in the first half of the year following a recent consultation.
Analysts warned that Centrica's investment programme, costing £600-800 million annually out to 2028, could strain cash flows if returns are not realised quickly. The results come ahead of an expected 7% reduction in Ofgem's energy price cap from April, which would cut typical annual bills by £117 to £1,641.
