30th Jul 2019 07:46
(Alliance News) - Centrica PLC slashed its dividend Tuesday after an "exceptionally challenging" first half resulted in profit and revenue both falling, worsened by its ongoing restructuring costs.
Meanwhile, the British Gas parent announced its chief executive will leave in 2020 and the company will sell its oil & gas business to focus on its customer-facing units.
For the six months ended June, the FTSE 100-listed utility firm sank to a GBP569 million pretax loss from a GBP415 million profit the year prior. This was after revenue fell 4.4% to GBP11.57 billion from GBP12.10 billion the year before.
Profit performance was hurt by exceptional costs surging to GBP845 million from GBP211 million the year prior. This was primarily due to rising restructuring, pension and impairment costs.
"Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows," Centrica Chief Executive Officer Iain Conn said. "We have also regrettably had to make the decision to rebase the dividend due to our changed circumstances including the UK energy price cap and increased demands on our cash flows, including additional pension contributions."
Centrica more than halved its interim dividend per share to 1.50 pence from 3.60 pence the year prior.
For the full year, Centrica has rebased its payout to 5.0p per share from the 12.0p paid the year before, with the cut attributed to changes regarding the UK default tariff price cap, additional pension deficit contributions and restructuring charges.
"The outlook is more positive for the second half of the year and we expect this momentum to continue into 2020, while we expect to meet our cash flow and net debt targets for 2019," Conn added.
"Today we have announced our intention to exit oil and gas production," Conn continued. "This will complete our shift towards the customer, as we focus on our distinctive strengths, with an emphasis on helping our customers transition to a lower carbon future."
Previously, the utility firm had already announced its intention to exit its Nuclear business. The firm will use proceeds from these sales to fund the restructure costs and reduce debt levels.
"This major refocusing of our portfolio will unlock further efficiencies enabling us to be even more cost-competitive, as we focus on being a leading Energy Services and Solutions provider", Conn said.
Centrica also announced that Conn would be leaving the firm in 2020 as the company prepares to move into a "new phase" following the proposed sale of its non-customer facing units.
The firm expects Conn to remain at the firm until "at least" the 2020 annual general meeting of the company. In 2019, this took place in mid-May.
In the meantime, Conn will continue to lead the firm in repositioning the company.
"Iain has led the strategic repositioning of Centrica since 2015 and has been the driving force behind our plan to turn Centrica into a sustainable business that is built around delivering clean, affordable energy and high-quality services and solutions for our customers, and to respond to the significant global challenge of moving to a lower carbon energy future," Centrica Chair Charles Berry said.
"Iain has now agreed with the board that, while he will continue to focus on driving this transformation, including pursuing the announced divestments and continuing to drive performance and efficiency, he will also support an orderly succession before stepping down in due course," Berry added.
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