Centrica (CNA) boss to step down amidst falling profits

Big dividend cut added to the disappointing results from the energy group.

Article updated: 30 July 2019 12:00pm Author: Ian Forrest

  • Firm announces cut in dividend and plans to sell its investment in oil and gas exploration and production.
  • Shares react to results by dropping 10% in early morning trading, taking them to a new low.
  • At current levels the shares are a medium to high risk hold only for investors who believe Iain Conn’s successor can turn things around.

Centrica had very little in the way of good news for investors today with the results coming in below expectations and a big cut in the dividend. The market already knew the company was struggling so the only real surprise was the news CEO Iain Conn will depart next year. The figures themselves showed a 2% drop in revenue to £13.8bn and a 49% decline in adjusted operating profit to £399m. On a statutory basis it moved to a £569m pre-tax loss and the interim dividend was cut by 58%. There was a 178,000 drop in energy supply accounts in the first six months but the company said it expected the second half to be better and believes it will still meet its full-year financial targets.

There’s no doubt these are poor figures and the market responded with a 10% drop in the share price, taking them down to a new low. The dividend cut was widely expected, although perhaps not quite on the scale announced but is a major blow for investors. Centrica is clearly trying to do what it can to help the situation, such as the sale of its oil and gas assets and exiting its nuclear power business. Given the shares have fallen by 70% since Conn took over in 2015 it is probably right to pass the reins on to someone else.

Our View on Centrica - Hold

At current levels the shares are a medium to high risk hold only for investors who believe his successor can turn things around with no further cuts in the dividend.

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.