Centrica share price rallies even as group reveals drop in profits

British Gas owner deeply regrets ‘very poor shareholder experience’

Centrica share price rallies even as group reveals drop in profits

Shares in Centrica (LON:CNA) have jumped in London this morning even as the British Gas owner posted a drop in profits due to weak performance at its Business energy supply unit, and particularly in North America. The group’s chief executive further apologised for ‘a very poor shareholder experience’.

As of 09:29 GMT, Centrica’s share price had added 4.31 percent to 137.90p, outperforming the broader UK market, with the benchmark FTSE 100 index having fallen deep into the red and currently standing 1.02 percent lower at 7,207.25 points. The group’s shares have lost more than 41 percent of their value over the past year, as compared with about a 1.4-percent drop in the Footsie.

Centrica ‘deeply regrets’ results

Centrica updated investors on its full-year performance this morning, posting a 17-percent drop in adjusted operating profit to £1.25 billion, reflecting ‘significantly reduced profit’ from its Business unit. The group’s adjusted earnings meanwhile fell 22 percent to £698 million.

“The combination of political and regulatory intervention in the UK energy market, concerns over the loss of energy customers in the UK, and the performance issue in North America have created material uncertainty around Centrica and […] this resulted in a very poor shareholder experience,” the group’s chief executive Iain Conn commented in the statement, adding that the company regretted ‘this deeply’.

The British Gas owner, however, trimmed down its net debt by £877 million to £2.6 billion, at the lower end of its targeted range.

Analysts weigh in on performance

Bloomberg quoted John Musk, an analyst at RBC Capital Markets, as saying in a note that Centrica had ‘very few negatives’ for the current year, and ‘supportive’ guidance for future earnings. The newswire also quoted Goldman Sachs as commenting that while the results were ‘weak by historical standards,’ they included measures to defend profits this year.

Centrica expects £200 million in efficiency savings in the current year and plans a like-for-like headcount reduction of 1,000.

As of 09:57 GMT, Thursday, 22 February, Centrica PLC share price is 137.75p.

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