Interactive Investor argues that ‘a sprinkling of negatives’ in Centrica’s (LON:CNA) latest results has overshadowed the ‘solid progress’ the British Gas owner has made, Citywire reports. The comments came after the blue-chip group reiterated its full-year targets yesterday but flagged a £70-million impact next year following industry regulator Ofgem’s energy price caps.
Centrica’s share price tumbled in the previous session as investors digested the update, giving up 9.23 percent and placing the stock near the bottom of the benchmark FTSE 100 index. The shares have inched marginally higher this morning, having gained 0.08 percent to 132.40p as of 08:13 GMT, as compared with a flat FTSE 100.
‘Solid progress’ at Centrica
Citywire quoted Interactive Investor’s Lee Wild as commenting yesterday that ‘a sprinkling of negatives’ in Centrica’s third-quarter update, including the loss of more customers and a new default tariff price cap from Ofgem, had ‘overshadowed solid progress in key areas’.
Despite the ‘short-term volume shows’ the group “is on track to save over £200 million this year and is throwing off lots of cash,” the analyst pointed out. “Centrica can easily afford the 12p annual dividend, but the market remains wary of anything that threatens the payout.”
Other analysts on group
Proactive Investors meanwhile quoted Russ Mould at AJ Bell as commenting that the trading update said that the group’s “dividend will be maintained at 12p so long as it meets targets on year-end net debt and operating cash flow”.
“Presumably Centrica has a good picture on where these numbers will end up, given there are only a few weeks of 2018 remaining,” he pointed out, adding, however, that while the company has delivered cost savings and appeared to be keeping a lid on borrowings, “only a return to growth would really reassure on the sustainability of the dividend”.