British Gas owner Centrica (LON:CNA) tumbled to the bottom of the FTSE 100 as it stunned investors with a dividend cut, hefty losses and profits warning for the current year.
Iain Conn, chief executive, said 2014 had been a very challenging year, with the slide in oil and gas prices at the end of the year adding to the problems of warm weather hitting consumption.
Earnings per share in 2015 would also be lower than 2014’s underlying 19.2p, he said, due to the lower oil and gas prices, which had affected its ability to make disposals.
Operating profits fell by 35% to £1.75bn, with British Gas’s contribution down by a fifth to £823mln.
A record warm year meant lower consumption with average dual fuel profits £42 lower and the average household bill down by £100.
Centrica’s upstream gas business saw profits almost halved at £606mln. In the next two years, exploration capital expenditure will be reduced by 40% to £650mln.
After impairment charges of £1.93bn, there was a net loss for the year of £1bn.
British Gas and the other major UK energy suppliers are under investigation by the competition authorities into prices in the UK. Centrica said it was engaging constructively with the CMA.
Conn added that the decision to rebase the dividend had been a 'very difficult' decision.
The final dividend of 8.4p, a 30% reduction, means a total for the year of 13.5p against 17p in 2013.
Shares fell 7.3% to 261p.