British Gas owner Centrica sees earnings slump

Centrica reported a slide in full-year operating profits on Thursday, weighed down by Covid-19, as it paused the final dividend.

Adjusted operating profits for the 12 months to 31 December, which exclude Direct Energy, came in at £447m, a 31% fall. The owner of British Gas attributed the decline to negative impacts of Covid-19, warmer weather and low commodity prices. Earnings per share slid 11% to 6.5p

Group revenues from continuing operations were £14.9bn, compared to £16.0bn a year previously, while the total number of residential customers fell 2% to 9.2m. British Gas Energy customers fell 2% to 6.9m.

Total exceptional charges were £1.6bn, which included restructuring charges of £274m and impairments of £1.3bn. The operating loss from continuing operations was £362m, although that was an improvement on 2019’s loss of £783m.

Centrica completed the £2.4bn sale of Direct Energy, its North American energy supply business, in January. It is part of a wide-ranging overhaul of the business, initiated by new chief executive Chris O’Shea, which includes the loss of around 5,000 jobs and the introduction of new terms and conditions for service engineers.

The firm, which was booted out of the FTSE 100 last year, said over 80% of workers had now accepted the terms but industrial action by some engineers was ongoing.

O’Shea said: “We have made a good start to the turnaround of Centrica, with the sale of Direct Energy now complete and our significant group restructuring on track.

“However, our journey to transfer has only just started as we seek to restore shareholder value by improving customer experience, retention and employment engagement while managing a strong balance sheet.

“It won’t be easy, but I am confident with have the people, brands and market position to deliver a successful turnaround in the coming years.”

The group announced in April that it was cancelling the 2019 final dividend in response to the pandemic. No interim payment was paid for 2020, and on Thursday Centrica confirmed that no final payment would be paid.

It did not say when payouts would resume, but noted: “We recognise the importance of dividends to shareholders and intend to recommence dividends to shareholders when it is prudent to do so.”

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