(qlmbusinessnews.com via theguardian.com – – Wed, 31st July, 2019) London, Uk – –
Owner of British gas cuts dividend as it announces Iain Conn will leave next year
Iain Conn has agreed to step down as chief executive of Centrica, the owner of British Gas, after the energy company swung to a loss for the first half of the year and slashed shareholder payouts.
The embattled energy boss said he would retire from the board by next year’s annual general meeting, five years after taking the reins of the company in 2015.
The former BP executive has faced increasing pressure to step down after a steady decline in the company’s market value, which is now a quarter of what it was when Conn took the top job.
Since then Britain’s biggest energy supplier has lost over 1m customer accounts and made thousands of job cuts as part of a plan to steady the company.
Conn said he had “agreed with the board that this is the right thing to do” after “months of talks” over the company’s future.
He announced his departure alongside worse-than-expected financial results for the first half of the year, and a “deeply regrettable” dividend cut for investors.
Centrica’s shareholders, which include about 600,000 individual investors, will receive less than half the expected return after the company slashed its interim dividend by 58% to 1.5p a share. It said the full-year dividend total will also be cut by 58%, from 12p to 5p a share.
The company’s share share price plunged 19% on Tuesday to 77p, the lowest in more than 20 years, making it the biggest faller on the FTSE 100.
The company announced its lowest dividend in 15 years less than four months after revealing it had handed Conn a 44% pay rise for 2018 to £2.4m. The hike in pay angered trade unions and was awarded despite a difficult year in which the company imposed two bill increases, warned on profits and announced 4,000 job cuts.Advertisement
Conn said he had reinvested most of his bonus payouts in the company while he worked to shift Centrica’s traditional energy business towards selling energy services and devices.
Many City analysts are unconvinced that the plan can bear fruit after a series of disappointing financial results for Centrica in recent years.
The company posted a pretax loss of £569m for the six months to 30 June compared with a profit of £415m last year.
Centrica blamed an “exceptionally challenging” environment in the first half of 2019, including the government price cap on standard energy tariffs and additional pension contributions.
The swing to a pretax loss is the latest blow to the owner of Britain’s biggest energy supplier which was already planning to sell its nuclear, oil and gas business units to pay off debts and cut thousands of jobs from its shrinking workforce.
“It has been an exceptionally challenging first half with some really difficult circumstances,” Conn said. “Our results were weak.”
The group took a pretax charge of £346m in the first half. This included £257m of restructuring costs, £64m one-off pension costs and asset writedowns of nearly £90m, partly due to the fall in near-term gas prices.
But Conn said the company “has momentum” which should see a return to growth in the second half of the year and into 2020.
Although British Gas lost 178,000 UK home energy supply accounts in the first half, the figures mark a slowdown in losses compared with recent years because its prices are more competitive and its brand remains strong, Conn said.
He said Centrica’s new deal with Ford to provide electric vehicle tariffs and charge points was an example of “where we are moving to” in the future.
By Jillian Ambrose and Julia Kollewe