Centrica Plc’s (LON:CNA) chief executive Iain Conn is to stand down after the British Gas owner slid deep into losses and cut the interim dividend.
The embattled group will pull out of oil and gas production, disposing of 69%-owned Spirit Energy via a trade sale, to focus more on renewables.
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"Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows,” said Conn, who added that the board had been forced to 'rebase' the dividend.
The utility posted a half year net loss of £550mln compared to a profit of £238mln.
Operating profits slumped by 49% due to a combination of changes in the tariff structure, low UK natural gas prices, outages at Hunterston B and Dungeness B nuclear power stations, and warmer weather than normal.
Dividend dashed
Cash flow was below expectations and as a result the interim dividend has been more than halved to 1.5p.
For the full year Centrica expects to pay out 5p, more than half from the 12p last year and even lower than the 7.5p that City analysts were expecting.
“The outlook is more positive for the second half of the year and we expect this momentum to continue into 2020, while we expect to meet our cash flow and net debt targets for 2019,” said Conn.
Conn-signed to history
Centrica's shares tumbled 17% to 75p by early afternoon on Tuesday, down to levels not seen since 1997, the year when British Gas split into three.
Conn, who has seen the market cap of the company crash from just below £14bn when he joined in 2015 to just £4.4bn at the current price, will remain with the company at least until the 2020 AGM.
“Having prepped the market for a dividend cut in February, the actual reduction remarkably still came in lower than expectations,” said JP Morgan.
Analysts at the investment bank said: “The key positive is the announcement than the CEO will step down in next year, making way for a fresh perspective on strategy, but we feel this will be broadly balanced by the litany of negatives strewn through the release.”