Just as things seemed to be looking up for Centrica (CNA), the group announced accelerating customer losses and full-year earnings per share guidance shy of market expectations. The number of home energy customers losses reached 372,000 during the four months to October, up from 226,000 over the first-half.
Management attributes the losses to a focus on “value over volume”, as it looks to bundle services to attract higher-margin customers. Fresh losses combined with challenges in the nuclear and distributed power divisions led management to guide to an adjusted EPS figure of 11.5p for the full year, well short of the consensus figure of 12.9p.
The updated guidance also means the dividend - if it is maintained at the same 12p level of the past three years - will not be covered by the company’s adjusted earnings per share for the first time in more than a decade.
The shares had enjoyed some respite in early September when it was revealed that energy regulator Ofgem’s price cap would be higher than expected, but closed the day trading down 9 per cent on the back of this update.
Inspections and outages have impacted the Nuclear business after regulators found cracks at the core of the nuclear reactor at Hunterston, in which Centrica owns a 20 per cent stake. Meanwhile, Spirit Energy’s unplanned outages have led to a drop in forecast production that is expected to persist into next year.
Despite this, analysts at RBC Capital Markets noted the group was still on track for its operating cash flow and net debt targets, which it predicted meant the dividend was likely to hold steady at 12p.
