Centrica Shares Tumble After Slashing Dividend, CEO Exit -- Update
July 30 2019 - 7:15AM
Dow Jones News
--Centrica said it will cut its 2019 dividend to 5 pence a share
from 12 pence in 2018, exit oil-and-gas production and target
further cost savings
--Chief Executive Iain Conn plans to step down from his role
next year
--Shares in the owner of British Gas fell sharply on the back of
the news, sending the stock to a two-decade low
By Adria Calatayud
Shares in Centrica PLC (CNA.LN) fell Tuesday after the British
Gas owner said that it plans to slash its 2019 dividend by 58% and
exit oil-and-gas production, and that Chief Executive Iain Conn
intends to step down next year.
The FTSE 100-listed utilities company launched plans to step up
its restructuring efforts and refocus its portfolio on
customer-facing activities, as it hopes to revive its fortunes
after taking a hit from an energy-price cap imposed by the U.K.
government.
The company said it will complete its shift toward focusing on
customer-facing businesses by divesting its oil-and-gas production
assets, a move that follows its intended exit from nuclear-power
generation. Divestment proceeds will be used to fund restructuring
costs and underpin its balance sheet, it said.
Centrica said it targets 1 billion pounds ($1.23 billion) in
cost savings over the 2019-2022 period, GBP250 million more than
previously planned. This will require cash restructuring
expenditure of around GBP1.25 billion, the company said.
The company said it will partly fund restructuring costs through
a cut to its full-year dividend to 5 pence a share from 12 pence a
share.
Mr. Conn will remain with the company at least until next year's
annual general meeting to lead the repositioning of its portfolio,
having joined the group in January 2015, Centrica said.
Centrica shares at 1034 GMT dropped 15% to 76.94 pence, which
would be the company's worst one-day percentage fall ever, and sent
the stock to a 21-year low.
Centrica reported a swing to a pretax loss of GBP569 million for
the first half compared with a profit of GBP415 million in the
year-earlier period. The company attributed the loss to lower
adjusted earnings and remeasurements due to falling gas prices.
Centrica posted a net loss of GBP550 million compared with a profit
of GBP238 million a year before.
Adjusted earnings attributable to shareholders fell by 63% to
GBP134 million, the company said.
Revenue fell to GBP11.57 billion in the first half from GBP12.10
billion a year before, the company said.
Centrica declared an interim dividend of 1.50 pence a share,
down from 3.60 pence a share in the first half of 2018. The company
backed its full-year guidance and said adjusted earnings will be
weighted toward the second half of the year.
Write to Adria Calatayud at
adria.calatayudvaello@dowjones.com
(END) Dow Jones Newswires
July 30, 2019 07:00 ET (11:00 GMT)
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