Bord Gáis Energy parent Centrica said its chief executive officer will step down after Britain's biggest energy supplier cut its dividend for the first time since 2015 and suffered a further decline in its customer base.
Iain Conn (56) will retire from the board next year as he finishes a restructuring designed to cope with increasing competition and a government cap on tariffs it can charge.
Centrica shares fell as much as 11 per cent in London trading, reaching their lowest since 1998.
Smaller rivals have lured away tens of thousands of Centrica's customers during a period where warm weather and operational issues cut into earnings. Mr Conn said he will complete a restructuring of the company, exiting upstream oil and natural gas production, and then depart leaving a smaller company focused on customer-facing businesses supplying electricity and energy services.
The announcement capped Mr Conn’s tumultuous four year leadership of Centrica, which has made a political lightning rod of the company formed from the former state-run British Gas in 1997. Unions were quick to criticise Mr Conn’s plan to maintain the pace of job cuts he announced in February and step up a cost savings target.
"More of the same, more job cuts on top of the thousands already gone and going, are panic measures, not a credible plan for recovery," said Justin Bowden, national secretary of the GMB union. "There must be a pause under a new chief executive, investment and a new plan for growth."
It’s targeting £1 billion of annual cost savings from this year through 2022, up by £250 million since February. The company maintained its estimate that it will shed 1,500 to 2,000 jobs this year from the some 30,520 it had at the end of 2018.
The board proposed an interim dividend of 1.5 pence a share, down from 3.6 pence for the same period a year ago. For the full year, the dividend will be cut to 5 pence a share.
“This set of steps is a fundamental re-positioning of the company and is the end of a journey we began in 2015,” Mr Conn said on a call with reporters Tuesday.
Customer numbers in Centrica’s main energy supply and services business fell 2percent to 23.6 million in the first half of the year. In its connected homes business, growth accelerated 49 per cent to 1.5 million.
“Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows,” Mr Conn said in a statement on Tuesday. “This major refocusing of our portfolio will unlock further efficiencies enabling us to be even more cost-competitive, as we focus on being a leading energy services and solutions provider.”
- Bloomberg
