British Gas profits tumble as household supply arm sees £80m warm weather hit

British Gas owner Centrica has seen annual earnings nearly halve in a “challenging” year as its household supply arm was knocked by an £80 million warm weather hit and as customers switched to cheaper deals.

The group reported underlying operating profits of £814 million for last year, down from £1.55 billion in 2024.

Earnings in its household energy supply business slumped 39% to £163 million as warmer weather meant customers turned down their central heating thermostats.

Centrica said the weather impact was £80 million over the full year.

It added: “Additionally, customers moving to fixed price products, typically at a discount to the standard variable tariff, reduced profitability compared to 2024.”

The group now has nearly a third – 32% – of customers on fixed price tariffs, compared with 25% at the end of 2024.

Shares in the firm fell 8% as it revealed it was pausing share buybacks to prioritise its investment programme.

Chief executive Chris O’Shea said while the trading conditions had been difficult, the supplier had grown customers across its retail arm for the first time in more than a decade.

It saw UK and Ireland household customer numbers increase by 1% to 7.96 million over the year, with 7.5 million in the UK, though this was boosted by 91,000 after taking on the customer base of failed suppliers Rebel Energy and Tomato Energy last year.

The gains from the two collapsed suppliers “offset a small decrease in underlying customers”, it said.

British Gas was last year overtaken by rival Octopus Energy as the UK’s largest household energy supplier.

Mr O’Shea said: “The environment has been challenging, and performance has varied across the business.

“However, we have remained disciplined, delivering strong operational performance and achieving customer growth across all our retail businesses simultaneously for the first time in over a decade.”

He added: “Pausing the buyback enables us to prioritise investment that creates lasting value for shareholders, while continuing to deliver the reliable, affordable energy that households and businesses need to power economic growth through the transition.”

The group said it plans to invest at least another £700 million in 2026 after spending in 2025 included a £1.3 billion investment for a 15% stake in the new Sizewell C nuclear power plant in Suffolk.

The results come as Cornwall Insight this week forecast a 7% reduction in Ofgem’s energy price cap when the next quarterly change is announced next Wednesday, with a predicted reduction of £117 to £1,641 a year for a typical dual fuel household from April 1.

This comes after Chancellor Rachel Reeves said last November that £150 would be cut from the average household bill from April by scrapping the Energy Company Obligation scheme introduced by the Tories in government.

Centrica’s figures also showed its Rough gas storage site – a facility under the North Sea off the east coast of England – suffered lower than feared losses in 2025 and is expected to roughly break-even in 2026, despite the group previously warning it would need urgent Government help to remain open.

A recent consultation on the future of gas storage in the UK closed earlier this week and the Government is expected to make a decision in the first half of the year.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “British Gas owner Centrica’s headline numbers were a tough read as energy markets adjusted to more normalised conditions.”

On its investment programme, he said: “Results aren’t going to come cheap or quickly, though, with between £600-800 million per year set to be invested in the transition out to 2028, which could put a strain on cash flows if returns aren’t as high or quick as planned.”