Centrica's Profile Is Derisked and Capital Allocation Has Improved

Centrica is the leading retail energy supplier in the U.K. operating under the brand British Gas. It also has upstream and midstream operations including oil and gas production in the North Sea and a 20% stake in EDF’s U.K. nuclear plants. Thanks to its upstream operations, Centrica was historically positively exposed to soaring commodity prices. Accordingly, the fall of the latter drove a 90% collapse in adjusted EPS between 2013 and 2020, leading to the cancellation of the dividend in 2020. Conversely, the rebound of commodity prices, driven by the energy crisis, boosted profits in 2022 and 2023.