Hargreaves Lansdown argues that markets are still fearful of a dividend cut at Centrica (LON:CNA), Citywire reports. The comments came after the British Gas owner updated investors on its performance, reiterating its full-year targets.
Centrica’s share price rose in the previous session, adding 1.36 percent to 149.15p, outperforming the broader UK market, with the benchmark index ending the session marginally lower. The group’s shares, however, remain more than 22 percent down over the past year. This morning, the stock has slipped marginally into the red, having given up 0.13 percent to 148.95p as of 08:18 BST.
HL weighs in on Centrica results
Citywire reported yesterday that while Centrica’s trading update ahead of its annual general meeting had maintained the blue-chip group’s guidance for the year ahead, Hargreaves Lansdown’s analyst George Salmon had said that so far this year it had been “a case of one step forward, one step back”.
“The Beast from the East provided a much-needed boost to the group,” he pointed out. “However, some of the extra volumes were offset by customer unrest following a higher number of boiler breakdowns. All the while, intense competition means account numbers continue to fall.”
Centrica revealed yesterday that it had benefitted from the cold weather snap in the UK which increased energy demand. The group, however, cautioned that its E&P segment, full-year production from Spirit Energy was now expected to be in the lower half of the 2018 targeted range.
Markets fear dividend cut
The analyst further noted that while Centrica’s holding of the dividend at 12p would “boost confidence to a degree’ and the ‘prospect of an 8%-plus yield will be attractive to some,” the market remained “wary the pressures on the group could mean a repeat of recent dividend cuts”.