Shares in British Gas parent Centrica are trading at levels not seen since 1998 after it reported a slew of negative news and said its chief executive was to go.
Iain Conn, the company said, would “step down” next year following an “exceptionally challenging” period.
The announcement was made alongside financial results which showed Centrica had swung to a £446m loss in the first six months of the year compared with profits of £704m in the same period last year.
It blamed a string of problems including the impact of the price cap on default energy tariffs, warm weather and a further bleeding of 178,000 customers from its British Gas arm.
Centrica said Mr Conn had “agreed with the board” to remain in post “to drive the repositioning of the company’s portfolio and improve underlying performance as it continues to gain momentum”.
Actions that were being taken, the company said, included an acceleration in its cost efficiency programme that now aims to deliver savings of £1bn a year between 2019 and 2022.
It marks a £250m annual increase and the scheme could include further job losses at British Gas as the company said its UK Home division, would be “fundamentally rebased” with further reductions in costs.
The company also announced its intention to leave oil and gas production behind to focus on provision of services to customers and a greener future.
While it maintained its full-year outlook, Centrica said the dividend had been slashed by more than 50% to 5p to reflect the impact of the price cap, additional pension deficit contributions and restructuring charges of around £1.25bn.
Shares – down by a third in the year to date ahead of Tuesday’s statements – fell by 10% when the FTSE 100 opened for business.
That took the price to levels not seen for 21 years.
Mr Conn told investors: “Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows.
“We have also regrettably had to make the decision to rebase the dividend due to our changed circumstances… The outlook is more positive for the second half of the year and we expect this momentum to continue into 2020, while we expect to meet our cash flow and net debt targets for 2019.”
He is expected to leave by next April – seen as a natural time to go.
Commenting on his looming departure, chairman Charles Berry said: “Iain has led the strategic repositioning of Centrica since 2015 and has been the driving force behind our plan to turn Centrica into a sustainable business that is built around delivering clean, affordable energy and high-quality services and solutions for our customers, and to respond to the significant global challenge of moving to a lower carbon energy future.
“Iain has now agreed with the board that, while he will continue to focus on driving this transformation, including pursuing the announced divestments and continuing to drive performance and efficiency, he will also support an orderly succession before stepping down in due course.”
George Salmon, equity analyst at Hargreaves Lansdown, said of the share price decline: “These results bring a lot of cloud and not much silver lining for Centrica shareholders.
“Adjusted operating profits are way down, and by more than had been expected.
“It’s a similar story on the dividend. Given how the cocktail of challenges had been brewing over the last couple of years, the cut isn’t a surprise in itself, but a near 60% reduction is harsher than had been feared.”