British Gas owner Centrica PLC (LSE:CNA) reports full-year results on 20 February, with analysts expecting steady performance in line with its five-year trend of stable or upgraded earnings.
The FTSE 100-listed group has provided more clarity on how it will invest its excess capital -- with share buybacks extended to September 2025 -- but analysts at UBS said the "key" is for the company to confirm terms and a decision on the Sizewell 'C' nuclear plant.
UBS expects the results to be "unexciting".
Consensus forecasts point to adjusted group EBIT of £1.59 billion, adjusted EPS of 18.62p and a dividend of 4.63p per share.
With the CEO having indicated that the energy trading and LNG arm is well hedged and so will not have benefitted from the recent rise in gas prices, UBS said it will be watching for updates on profitability at the BG Services arm and any clarity on the group pension deficit.
"The big drain on cash flows at Centrica has been the pensions deficit repair, which has taken £1.35 billion (pre-tax) cash in the past six years. The next triennial valuation where we get a technical provisions number is due as of March 2025 and is due for agreement with the trustees by June 2025. We would hope to hear on both the deficit (UBSe c£0.8bn in December 2025) and repair," the analysts said.
Commentary on investment plans, including Sizewell 'C', is hoped-for, though the major decision may come later.
UBS said its view is that Sizewell ‘C’ is more likely to reach a final investment decision than the Morecambe Bay (carbon/hydrogen storage) and Rough (H2 storage), "and even then it will be an expensive asset for the UK to fund given long-dated rates are expensive".
Final investment decision and financial close are due by May, and UBS expects Centrica’s equity commitment to be limited to around £2 billion for around a 10-15% stake, with the most important elements being the risk-sharing factors and the allowed return/return structure, analysts added.