On the back of three profit warnings last year, Centrica's (CNA) dismal full-year figures will be of little surprise to investors. The performance of the UK's biggest utility was hit badly by falling oil and gas prices. Operating profit at its Direct Energy business nearly halved to £150m, while profit at British Gas dropped a fifth to £823m. Benign weather conditions lowered overall consumption and wiped around £100 off the average household energy bill.
As a result, the final dividend has been cut by 30 per cent. New chief executive, Iain Conn, said this was "urgent" in order to preserve the group's credit ratings and balance cash flows. The energy group will also cut exploration and production capital expenditure by £250m in 2015 and a further £150m in 2016. It also plans to reduce its North Sea investment by around 20 per cent during these years.
After an unsuccessful capacity market auction for its gas-fired power stations, the group plans to sell its Killingholme and Brigg stations, which it hopes to start winding down in 2016 after employee consultation. And the cost-cutting measures do not stop there. Centrica will carry out a strategic review on areas including its operating efficiency and sources of growth. This is slated for completion by July, when its half-year results are due.
Deutsche Bank expects adjusted EPS of 21.61p in 2015, with pre-tax profit of £1.6bn.
| CENTRICA (CNA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 261p | MARKET VALUE: | £13bn | |
| TOUCH: | 260-261p | 12-MONTH HIGH: | 349p | LOW: 255p |
| DIVIDEND YIELD: | 5.2% | PE RATIO: | na | |
| NET ASSET VALUE: | 55p* | NET DEBT: | 169% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 22.4 | 2.8 | 37.6 | 14.3 |
| 2011 | 22.8 | 1.3 | 8.6 | 15.4 |
| 2012 | 23.9 | 2.4 | 24.0 | 16.4 |
| 2013 | 26.6 | 1.6 | 18.4 | 17.0 |
| 2014 | 29.4 | -1.4 | -20.2 | 13.5 |
| % change | +11 | - | - | -21 |
Ex-div: 30 Apr Payment: 25 Jun *Includes intangible assets of £4.6bn, or 93p a share | ||||
