centrica plc-sp adr (CPYYY) Key Developments
Centrica to Cut 6,000 Jobs
Jul 30 15
Centrica is to cut 6,000 jobs and slashes gas exploration. The jobs cull is part of a wider move to reduce annual spending by £750 million come 2020.
Centrica plc Announces Earnings Results for the First Half Year of 2015
Jul 30 15
Centrica plc announced earnings results for the first half year of 2015. The company announced earnings in the first half of the year were GBP 611 million, up 15% with corresponding earnings per share of 12.3 pence. Post-tax adjusted operating cash flow was GBP 1.1 billion. Revenue decreased 2% compared to the first half of 2014, primarily driven by lower realized unit prices for oil and gas in Centrica Energy and fewer customer accounts and lower unit retail prices in Direct Energy. Adjusted operating profit fell 3% to GBP 1 billion, while customer-facing businesses, British Gas, Bord Gáis and Direct Energy, reported higher profit. This was more than offset by a lower profit in Centrica Energy. Adjusted earnings increased to GBP 611 million, 15% higher than in the first half last year and equivalent to 12.3 pence per share. Net debt fell from GBP 5.2 billion at the end of 2014 to GBP 4.9 billion as a result of positive net cash flow. Organic capital expenditure was just over GBP 200 million lower than in the first half of 2014. In E&P, capital expenditure was slightly over GBP 400 million, down 24% compared to the first half last year and remains on track for full year expenditure of approximately GBP 800 million. In the first half of 2015, the group had GBP 357 million of cash inflow in comparison to a GBP 59 million cash outflow in the same period of 2014. EBITDA fell 4% to just over GBP 1.4 billion, primarily driven by lower cash generation in E&P from falling commodity prices. Adjusted operating cash flow was $1.1 billion, slightly lower than last year.
Centrica plc Announces Interim Dividend for the First Half Ended June 30, 2015, Payable on November 26, 2015
Jul 30 15
Centrica plc announced an interim dividend for the first half ended June 30, 2015 of 3.57 pence per share, 30% lower than the 2014 comparative of 5.10 pence per share, will be paid on 26 November 2015 to shareholders on the register on 2 October 2015. Ex-dividend date is 1 October 2015.
Centric Concludes Review
Jul 30 15
Centrica plc (LSE:CNA) announced outcome of its strategic review. The company concluded stating: “Centrica’s strength lies in being a customer-facing business. We are an energy and services company. Our purpose is to “provide energy and services to satisfy the changing needs of our customers”; Our activities and priorities will therefore be focused on meeting the needs of our customers and the shape of the Group will reflect this. Sources of competitive advantage include strong market shares, good brands, deep energy services capability and the ability to process a high volume of transactions at scale; We will aim to deliver long-term shareholder value through both returns and growth; Operating cash flow growth of 3-5% per annum, underpinned near term through efficiencies; Progressive dividend policy, in line with sustainable operating cash flow growth; Return on average capital employed of 10-12%; Our long-term growth focus will be on energy supply, services, distributed energy and power, the connected home and energy marketing and trading. Relative to 2015, we will commit about £1.5 billion of additional operating and capital resources to drive growth in these areas over the next five years; Energy supply a key contributor to Group cash flow. Growth driven through cost efficiency, improved customer service and retention across all markets, and growth in share in the Republic of Ireland and North America, to offset competitive intensity and energy efficiency; Services growth through efficiency and an expansion of our product offering, including propositions for landlords in the UK and protection plans and solar in North America; expect to invest an additional £250 million of operating cost into services growth over the next five years; Distributed energy and power a material opportunity with B2B customers, including energy efficiency, flexible generation and new technologies alongside energy management systems and optimization; £700 million of additional operating and capital resources expected to be invested in this area over the next five years; Connected homes growth through capitalizing internationally on our existing UK market-leading position and end-to-end capabilities; expect to invest £500 million of operating costs and capital expenditure in this area over the next five years, in capacity and capability; Energy marketing and trading growth through leveraging our proven optimization and risk management capabilities to LNG and route to market services; expect to invest an additional £150 million in operating costs and capital expenditure over the next five years; We will reduce and limit scale in E&P and central power generation, lowering the Group’s capital intensity. Relative to 2015, resource allocation to these areas will fall by about £1.5 billion over the next five years; Transition to a smaller E&P business of between 40-50mmboe per annum, focused on the North Sea and East Irish Sea, consuming £400-600 million of annual capital expenditure; Limit our emphasis on central thermal power, with skills migrated to distributed energy and power; Exit our remaining wind joint ventures; Our interest in the UK’s nuclear fleet considered as a financial investment; Aim to release £0.5 billion-£1 billion of divestment proceeds by 2017 from E&P and wind; In addition to the shift in future resource allocation, we will target cost efficiencies of £750 million per annum by 2020 relative to a 2015 baseline, with about two-thirds of the savings expected to be delivered by the end of 2018. This excludes the costs of smart meter installation. Net of inflation, and before additional investment in growth areas, we expect our like-for-like 2020 operating costs to be £300 million below 2015; Activity driven in four areas: customer-facing businesses; Centrica Energy; Group functions including corporate center, and; procurement and supply chain optimization of third party costs; Focus on simplification, consolidation, automation and support function transformation; A common operating model will be established across all customer-facing geographies to leverage international scale and pursue synergies.; With additional allocation to growth areas, we would expect our reported operating cost base in 2020 to be at or below 2015 having offset inflation and growth; We expect this programme to reduce like-for-like headcount by about 6,000 roles, with about half through turnover and attrition and about half through redundancies. With investment in growth areas, we expect the net impact on headcount to be about 4,000 roles; We will manage the Group within a clear financial framework; Compound annual growth rate (CAGR) in operating cash flow of 3-5% per annum until 2020, based on flat real oil and gas prices and normal weather; Operating cost growth below inflation, with the cost efficiency programme more than offsetting inflation in the near term; Capital expenditure limited to £1 billion per annum in the near term and no more than 70% of operating cash flow longer term, to underpin dividend and credit rating; Return on average capital employed of 10-12%; Strong investment grade credit ratings of Baa1/BBB+ or better; and Progressive dividend policy, in line with sustainable operating cash flow growth.”
Centrica Completes Strategic Review
Jul 30 15
Centrica plc (LSE:CNA) said it has completed its strategic review of the business which will see a shift in investment away from its upstream segment and toward its British Gas business as it reported a rise in pretax profit but a slight fall in earnings in the first half of 2015. Centrica has been conducting a review of the business "in light of significantly changed circumstances" and said after a "rigorous" analysis, it has concluded it must focus on meeting the needs of our customers and to deliver long-term shareholder value through both returns and growth. "The conclusion of our strategic review provides a clear direction for the business. Centrica is an energy and services company. Our purpose is to provide energy and services to satisfy the changing needs of our customers, and as such we will focus our growth ambitions on our customer-facing activities," Iain Conn, Chief Executive Officer of Centrica, said.