Centrica shares down as outlook darkens

FTSE 100 energy and services provider Centrica (LON:CNA) said that it expects cash flow during 2019 to be around £350 million below 2018 levels due to tax phasing, the UK default energy supply tariff caps, and low nuclear volumes. The company announced that it would be taking additional steps to improve underlying performance during 2019, including new cost efficiencies, tighter capital control, and a £500 million divestment programme.

The company also set out its 2018 performance which included a 6% increase in revenues and a 15% improvement in EBITDA. Group chief executive Iain Conn commented: “Centrica’s financial performance in 2018 was mixed against a challenging external backdrop. At the headline level, adjusted operating profit was up 12% and adjusted operating cash flow and net debt were within our target ranges. However, volumes in Spirit Energy and Nuclear were disappointing and recovery in North America Business was slower than expected. Our 2019 financial performance will be impacted by the UK default tariff cap and continuing lower volumes in E&P and Nuclear, meaning our 2018-20 target range for average adjusted operating cash flow is under some pressure. We are taking actions to strengthen the company in 2019 and improve underlying performance in 2020, including driving cost efficiency hard and delivering further divestments, and as a result net debt levels remain underpinned. We have developed material new customer-facing capabilities in both Consumer and Business, exposing Centrica to an expanding opportunity-set, with encouraging indications of stabilisation and growth potential. Our focus is on performance delivery and financial discipline as we satisfy the changing needs of our customers“.

The price of Centrica shares plunged by 11.81% to 121p (as of 13:55 GMT).