(Bloomberg) -- Centrica Plc declined the most in eight weeks in London trading, even after extending its buyback program to return cash to shareholders.
The British Gas owner will repurchase a further £300 million ($382 million) in shares until September 2025, it said in a trading update. That will take its buybacks, started two years ago, to £1.5 billion.
Centrica’s shares dropped as much as 2.8% on Tuesday, erasing an earlier gain, before paring the loss.
The move echoed a decline in the company’s stock price in July, when it previously announced an extension of buybacks that disappointed investors. More recently, Centrica’s shares had been trending higher, along with European gas prices.
Given the strong stock price recently, and expectations of 2024 earnings to be near the top of the forecast range, “we expect shares to be a bit weak on the back of the statement today,” Citigroup Inc. analysts including Jenny Ping said in a note.
Centrica is seeking to transform its Rough gas-storage site in the North Sea into a hydrogen storage facility, an estimated £2 billion overhaul. While hydrogen is expected to play a role in helping the UK reach its net zero goals, the technology has come under scrutiny due to the high cost of building infrastructure.
The company has said hydrogen storage can help offset swings in renewable power generation, but to proceed with the redevelopment of Rough, it needs some kind of cap-and-floor pricing model.
It sees infrastructure adjusted operating profit in the range of £250 million to £400 million next year, according to the trading update. That includes an expected loss of £50 million to £100 million for energy storage.
The 2025 guidance range for infrastructure is “in-line with consensus,” said Citigroup’s Ping. The bank does “not expect Rough losses to continue beyond FY25, should government support fail to materialize.”
Centrica expects 2024 full-year earnings per share to be broadly in line with analyst expectations, with capital expenditure around £600 million.
Its statement didn’t include an update on potential investment in the UK’s new nuclear plant Sizewell C. Chief Executive Officer Chris O’Shea has said on various occasions that the company’s engagement in any UK infrastructure projects, including Sizewell, would hinge on the “right conditions.”
(Updates with context throughout.)
©2024 Bloomberg L.P.
