18th Feb 2016 07:23
LONDON (Alliance News) - Centrica PLC on Thursday reported full year results that significantly beat expectations, as the drag on earnings from its upstream unit was not as bad as expected.
The FTSE 100 gas distributor and producer reported a 4% fall in net earnings to GBP863.0 million in 2015 from GBP903.0 million in 2014, but the figure was significantly higher than analyst expectations of GBP733.0 million. Net earnings are profit after tax attributable to shareholders.
Adjusted operating cashflow, which Centrica said would be a "major focus" back in December, came in ahead of Centrica's guidance at GBP2.25 billion, which was also up 2% from GBP2.20 billion last year. Revenue for 2015 fell 5% to GBP28.00 billion.
"Centrica has delivered a resilient financial performance, with solid 2015 adjusted earnings despite the challenge of falling wholesale oil and gas prices. Operating cash flow has been strong, and with capital discipline this has allowed the group to reduce net debt. In 2016 we expect operating cash flow also to be over GBP2.00 billion," said Chief Executive Iain Conn.
Net debt at the end of 2015 stood at GBP4.74 billion, a 9% reduction from GBP5.19 billion at the end of 2014.
The fall in earnings was mostly caused by Centrica Energy, the company's upstream oil and gas unit, following heavy declines in prices during the year. British Gas reported a small fall in operating profit before items, with Centrica's North American arm, Direct Energy, improving, offsetting some of those two declines.
Overall operating profit before items slipped to GBP1.45 billion from GBP1.65 billion. The upstream unit reported operating profit of only GBP255.0 million compared to GBP648.0 million in 2014, whilst British Gas recorded operating profit of GBP809.0 million, down from GBP823.0 million.
The fall in earnings for the upstream unit was not as bad as analysts expected but the fall in earnings from British Gas was not expected, with analysts forecasting a small rise.
The dividend for the year will be 12.0 pence per share, down from 13.5 pence in 2014. Analysts were expecting a fall in the dividend, and that 12.0p dividend can also be compared to the 17.0p paid in 2013. Centrica said it is committed to delivering a progressive dividend tied to underlying operating cashflow.
Centrica said it plans to make GBP750.0 million in annual savings by 2020 through a cost efficiency programme, of which around GBP200.0 million will be achieved in 2016.
By Joshua Warner; [email protected]; @JoshAlliance
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