British Gas owner Centrica PLC (LON:CNA) saw its shares gain nearly 6% on Thursday despite what it described as a “weak” second half, with full-year adjusted earnings in line with forecast, its dividend held, and a new £500mln cost programme initiative pleasing shareholders.
The FTSE 100-listed firm's full-year adjusted operating profit was down 17% to £1.25bn, while adjusted earnings fell by 22% to £698mln, weighed by higher financing costs and tax rates, and at 12.6p, the group’s earnings per share was 25% lower than in the preceding year.
READ: Centrica loses 823,000 energy supply customers in 'disappointing' second half
But a silver-lining was that group debt had reduced by £877mln to £2.6bn at the end of the year, which was at the lower end of the targeted £2.5bn to £3bn range.
The company also maintained its dividend pay-out at 12p per share.
Looking ahead, the energy supplier emphasised a focus on “performance delivery and financial discipline” targeting some £500mln of additional ‘cost efficiency’ and it has capped capital investments to no more than an average of £1.2bn per year.
It also noted that it intends to sell is UK nuclear investments and said it has no plans for any major mergers and acquisitions activity.
READ: British Gas owner Centrica to ditch standard variable tariffs as it looks to 'reform UK energy market'
Examining what is described as “a very poor shareholder experience,” Centrica chief executive partially blamed political and regulatory intervention in the UK energy market for creating “material uncertainty” around the group.
“We regret this deeply, and I am determined to restore shareholder value and confidence,” said Iain Conn.
“The underlying trends driving our strategy are clear, as are the distinctive capabilities we have to benefit from them.
“We are committed to delivering attractive returns and growth over the medium term. Our focus today is on performance delivery and financial discipline - on demonstrating top line growth as we deliver improved service and new propositions for our customers, and driving efficiency as hard as possible to underpin our competitiveness.”
Shares gain nearly 6%
In early afternoon trading, Centrica shares were nearly 6% higher at 140.05p.
AJ Bell investment director Russ Mould said: “Investors were expecting a very poor 2017 performance from Centrica and that is what they got.”
But, he added: “Relief the situation had not deteriorated any further helped the shares rise in response to the results. Notably, the company has also maintained its dividend at 12p.”
Mould concluded: “The group plans to forgo major acquisitions and cut costs, but it faces the possible implementation of price caps in the UK and still needs to address customer losses in both its consumer and corporate businesses.”
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