When we first tipped energy provider Centrica (CNA) back in March last year, we expected full-year revenue and profit to fall as it set the stage for a larger recovery. Revenue was indeed lower, but it turned a pre-tax profit (see table), while adjusted operating profit rose 4 per cent to £1.5bn. The group has been pursuing a "customer-focused strategy", stripping out costs and turning away from its more capital-intensive exploration and power generation divisions.
This strategy has had mixed success. Cost-cutting programmes delivered savings of £384m for the year, more than half of the £750m targeted by 2020. But for its core energy supply segment, the overall customer account numbers fell 3 per cent across both its consumer and business sectors. The group's chief executive, Iain Conn, admitted the combined total of 27,544 at period-end may be "one of the lowest ever", and the group's shares fell 4 per cent on the day.
The group has had more success reducing net debt, which fell by just over a quarter to £3.5bn. Growing operating cash flows mean Centrica is edging closer to the sub-£3bn debt level at which it will look at restoring a progressive dividend. Mr Conn says it is "months away, not years away".
Adjusted EPS was 16.8p; prior to these results, analysts at JPMorgan Cazenove expected the same for 2017.
CENTRICA (CNA) | ||||
---|---|---|---|---|
ORD PRICE: | 224.6p | MARKET VALUE: | £12.3bn | |
TOUCH: | 224.6-224.7p | 12-MONTH HIGH: | 248p | LOW: 195p |
DIVIDEND YIELD: | 5.3% | PE RATIO: | 7 | |
NET ASSET VALUE: | 49p* | NET DEBT: | 122% |
Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2012 | 23.9 | 2.42 | 24.0 | 16.4 |
2013 | 26.6 | 1.65 | 18.4 | 17.0 |
2014 | 29.4 | -1.40 | -20.2 | 13.5 |
2015 | 28.0 | -1.14 | -14.9 | 12.0 |
2016 | 27.1 | 2.19 | 31.4 | 12.0 |
% change | -3 | - | - | - |
Ex-div: 11 May Payment: 29 Jun *Includes intangible assets of £4.38bn, or 80p a share |