Centrica, the owner of British Gas, will cut a further 4,000 job cuts, as it blamed “significantly reduced profit” in its business supply division, in the UK and North America, for dragging down the group’s profits.
The FTSE-100 group said adjusted group operating profits had fallen 17 per cent to £1.25bn for the year ended December 2017.
It said it would cut costs further by £500m per year to reach a target of £1.25bn by 2020. Overall, it said it expected the new “cost efficiency programme” to involve a reduction in like-for-like headcount of around 4,000 by 2020. Around 1,000 jobs are expected to be lost this year.
Shares rose 4 per cent at the open.
Iain Conn, chief executive, said:
The combination of political and regulatory intervention in the UK energy market, concerns over the loss of energy customers in the UK, and the performance issue in North America have created material uncertainty around Centrica and, although we delivered on our financial targets of for the year, this resulted in a very poor shareholder experience. We regret this deeply, and I am determined to restore shareholder value and confidence.
The FTSE-100 group said adjusted earnings were 22 per cent lower to £698m. Investors had feared that Centrica might cut its dividend but the company said on Thursday it would propose a payout of 12p per share, flat with the year before.
Mr Conn said the company expected to maintain the current level of the dividend, “subject to generating adjusted operating cashflow within the targeted range and net debt remaining within a £2.25bn-£3.25bn range”.
Centrica also announced it would look to sell its 20 per cent stake in Britain’s fleet of nuclear power stations by 2020. It added that it did not intend to pursue any major growth acquisitions over the next two years, “reflecting the uncertainty surrounding the UK energy supply market” and its desire “to maintain balance sheet strength”.
The poor performance comes after Centrica warned last November that it annual profit would miss market expectations due to poor performance at its business energy supply division, sending its shares to an 18-year low. At the same time it reported hundreds of thousands of lost customers in the UK. The company is the biggest supplier of gas and electricity to British households where it faces regulatory pressure as the government moves to introduce a cap on prices.
The company reported a £476m post-tax net exceptional charge, predominantly relating to impairments of its exploration and production assets. Group net down had fallen £877m to £2.6bn, at the lower end of the £2.5bn-£3bn targeted range at the end of 2017. .
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