Iain Conn has agreed to end his tumultuous four-and-a-half-year reign as chief executive of Centrica, Britain’s biggest energy supplier, after making another hefty cut to the dividend and announcing the sale of its oil and gas production arm.
Shares in Centrica plunged 19 per cent to a 22-year low after it slashed the dividend by more than expected to 5p — down 58 per cent — raised cost-savings targets and said it would offload its stake in Spirit Energy, its oil and gas joint venture.
It also downgraded revenue expectations from one of its key growth businesses which sells devices for the home such as smart thermostats and light switches that can be controlled remotely, once again raising questions about the company’s strategic direction.
Analysts have long questioned whether Centrica needed a rethink after Mr Conn decided in 2015 to refocus the company away from oil and gas production to focus on customer-facing business such as energy supply and smart “connected home” products.
“I think investors are just tired,” said Deepa Venkateswaran, analyst at Bernstein said following Tuesday’s announcement.
The share price fall heightened fears that Centrica could be ejected from the FTSE 100 index at the next reshuffle and become vulnerable to activist investors that may try to break up the company.
One person familiar with the thinking of Centrica’s board said the break-up value of the group was closer to 150p a share. The stock closed at 73.58p on Tuesday.
Shares in the energy supplier, which operates in countries including North America and Ireland as well as its UK home market, have fallen more than 70 per cent since Mr Conn joined the company in January 2015 from BP, where he oversaw the oil major’s refining and marketing business.
He has agreed with Centrica’s board, led by new chairman Charles Berry, to leave after the company’s annual meeting next year, a decision Mr Conn insisted was mutual and about which he had been holding discussions for a number of months.
“It wasn’t that the board suggested [I depart] and I agreed, we agreed together,” Mr Conn said.
Mr Conn has been a divisive character in the UK, where Centrica-owned energy provider British Gas has a particularly high-profile owing to its privatisation in 1986 as part of a sweeping programme initiated by former prime minister Margaret Thatcher. It has a significant retail shareholding.
His pay, which has totalled more than £11m since 2015, has frequently come under attack from campaigners against excessive boardroom remuneration and unions, at a time when the company has also been making deep job cuts.
In the past four years Centrica has announced 9,000 jobs cuts and unions are braced for more after the company raised an annualised efficiency savings target for 2019-2022 by £250m to £1bn.
Centrica fell to a £569m pre-tax loss in the first six months of the year, from a £415m profit a year earlier as it booked hefty exceptional charges, including restructuring costs and higher pension contributions.
Between January and June it lost 178,000 domestic energy supply accounts in the UK, with the biggest suppliers under pressure from new entrants to the market offering cheaper deals. Mr Conn said, however, that the number of accounts had grown in May and June.
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