Share buybacks continue to be all the rage among London-listed companies, judging by the latest round of earnings calls.
Centrica PLC (LSE:CNA) added to the raft of buybacks in the energy sector with a new £300mln scheme announced today, bringing the total to £550mln or close to 10% of its market cap, which is the current limit under the company's guidelines.
Shares in the integrated energy group were sent 5% higher to 103.69p on Thursday as a result.
Centrica joined large-caps BP plc and Shell PLC (LSE:SHEL, NYSE:SHEL), who last week announced their own jumbo multibillion-pound buybacks as revenues hit record highs on the “windfalls of war” as Ed Miliband recently put it.
These energy sector buybacks have proved to be controversial, with outrage among climate activists and politicians at oil firms lining the pockets of shareholders at a time when a perceived lack of spending on improving production capacity is causing a supply-chain bottleneck.
But scandal-hit Centrica’s buyback is controversial for another reason.
How do you square record profits, bumper dividends and soaring share prices with consumers being cut off and doors kicked in to install prepay gas meters that left vulnerable people at risk of having their heating cut off?
“With difficulty,” if you ask Proactive’s Jeremy Cutler, so shareholders shouldn’t be surprised should a windfall tax land on the group’s doorstep at some point.
Not that customers seeing hefty gas bills landing on theirs will be too sympathetic.
Banking on buybacks
Aside from energy, buybacks are proving popular among financial services firms too.
Despite an earnings miss, Standard Chartered PLC (LSE:STAN) today announced a US$1bn buyback, leading to a moderate 2.5% add to 748.2p.
Then there’s the Barclays PLC (LSE:BARC) situation.
While its £500mln buyback purportedly underwhelmed in yesterday’s earnings call, it was still there despite a fall in annual pre-tax profits due to soaring credit impairment charges and a giant litigation bill.
Outside of financial services, global information and analytics group RELX PLC (LSE:REL) today announced an £800mln share buyback programme, building on the £500 million returned to investors last year.