Shares in Centrica (LON:CNA) have taken a turn for the worse in today’s session even as the British Gas owner delivered a rise in cashflow and earnings for 2016. Investors, however, have been disappointed by the group’s decision to leave its dividend unchanged.
As of 10:13 GMT, Centrica’s share rice had given up 3.85 percent to 224.70p, underperforming the broader London market, with the benchmark FTSE 100 index currently 0.09 percent worse off at 7,295.51 points. The group’s shares have gained more than six percent over the past year, but are down by some four percent in the year-to-date.
Centrica announced in a statement this morning that its adjusted earnings per share had climbed by four percent to 16.8p last year. The company’s adjusted operating cash flow meanwhile came in 19 percent higher at £2.69 billion. The British Gas owner, which has been trying to counter lower energy prices with cost-cutting measures, further pointed that its efficiency programme had delivered £384 million of cost savings, with further £250 million expected in the current year.
“2016 was a year of robust performance and progress in implementing our customer-focused strategy,” Centrica’s chief executive Iain Conn commented in the statement, adding that the British Gas owner was entering 2017 “with encouraging underlying momentum and positioned to deliver longer-term returns and growth”.
The FTSE 100 group, however, left its dividend at 12.0p per share, noting that it expected to restore its progressive payout to shareholders when its net debt is between £2.5 billion and £3 billion, a level targeted by the end of the current year. For 2016, Centrica reported net debt of under £3.5 billion, marking a 27-percent drop year-on-year.
“Today’s dividend announcement of no growth in 2016 was a surprise,” analysts at Jefferies pointed out, as quoted by The Times. “The likely reason for this is the increase in pension deficit to £1.1 billion, which the rating agencies include in their debt calculations.”