Share price jumps up in early trading, showing the low level of expectations in the market
Centrica remains on track as customer account loss plateaus
- While company reports losing 107,000 energy supply customers, loss was offset by growth in other areas, which led to an overall 214,000 increase in accounts in four months to October.
- Guidance for full year cash flow and net debt remained unchanged with earnings weighted towards the second half of the year.
- Group announces increase in cost efficiencies to £300mn.
- 8% rise in shares this morning highlights low level of expectations in the market more than anything else.
- Recommendation: we maintain our medium to high risk ‘Hold’ recommendation for investors who believe the worst to be over.
Energy group Centrica managed to bring a little cheer to its investors today as it reported trading so far in the second half has been in line with its expectations. Its guidance for full year cash flow and net debt remained unchanged, with earnings weighted towards the second half of the year. The company still lost 107,000 energy supply accounts in the UK but that was more than offset by growth in other account types and the consumer division overall saw a 214,000 increase in accounts in the four months to October. In North America the number of accounts increased by 86,000.There was also good news on cost savings, now set to reach £300m rather than £250m.
The fact that the shares rose 7% in early trading in response to what is a fairly standard update perhaps tells us more about the low level of expectations in the market than anything else. There were some positive signs today but the energy giant has had a dismal year so any signs of stability in its trading are notable. The company is looking for a new CEO and remains under pressure from the government price cap and steady loss of energy supply accounts. Investors have already seen a big 58% cut in the dividend and the shares remain a medium to high risk ‘Hold’ only for those who believe the worst to be over.
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