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FTSE 100 energy outfit Centrica (LON:CNA) saw its shares drop by 5.31% to 144.60p (at 10:40 BST) despite management making assurances that last year’s dividend levels would be maintained. Group revenues for the six months ended 30th June were 7% higher than those for the same period of 2017, but the company’s adjusted operating profits in both consumer and business markets fell significantly due to rising wholesale energy prices and the impact of legacy gas contracts with drops of 20% and 57% respectively.
Operating profits during the first half were down by 4% at £782 million, but effective tax rates rose by 9 percentage points to 39% and input costs rose rapidly.
“In a first half in which we experienced rapidly rising commodity prices, extreme weather patterns, continued competitive pressures and ongoing political and regulatory uncertainty, Centrica demonstrated resilience from its portfolio of businesses,” said CEO Iain Conn.
“We delivered stable gross margin and EBITDA relative to 2017, and adjusted operating cash flow of £1.1bn. We are on track to achieve our full year Group financial targets and expect to maintain the full year dividend per share at its current level, subject to delivering adjusted operating cash flow and net debt in line with our target ranges.
“We continue to make progress on implementing our strategy. We have developed new propositions and delivery capabilities in both customer divisions and our cost efficiency programme is on track. Although we are awaiting the final outcome of regulation to impose a temporary cap on all default tariffs for residential customers in the UK, we have plans in place to manage this. Our focus remains on performance delivery and financial discipline.”