Britain's top energy firm Centrica dives into annual loss
The gloomy news sent Centrica's share price to the top of the fallers board on London FTSE 100 index
LONDON (AFP) - Britain s biggest domestic energy provider Centrica revealed Thursday it sank into a large net loss last year on the back of vast asset writedowns and tumbling gas and oil prices.
The announcement, coupled with news that it will cut investment and slash its dividend by almost a third, sent Centrica shares plunging.
The company suffered a loss after taxation of GBP1.01 billion ($1.56 billion, 1.37 billion euros) in 2014, it said in a results statement.
That contrasted with a 2013 net profit of GBP 950 million and dashed expectations for profit of GBP 945 million, according to analysts polled by Bloomberg.
The performance was hit by almost GBP 1.4 billion of asset writedowns, including GBP 712 million linked to its exploration and production division.
Revenues however increased by 11 percent to GBP 29.4 billion last year.
At the same time, the shareholder dividend for 2014 was cut to 8.4 pence per share, down from 12.08 pence a year earlier and marking the beginning of a 30-percent reduction.
"2014 was a very difficult year for Centrica and the recent fall in oil and gas prices creates further challenge," said new Chief Executive Iain Conn in the earnings release.
"We are cutting investment and costs in response. However, it is with regret that, along with reducing capital expenditure and driving efficiency beyond planned levels, we have taken the difficult decision to rebase the dividend by 30 percent.
"In addition, given the changed external environment we are reviewing the longer term strategy."
The gloomy news sent Centrica s share price to the top of the fallers board on the London FTSE 100 index.
Centrica shares sank 8.50 percent to 257.20 pence in early afternoon deals on the FTSE, which was 0.09 percent lower at 6,892.0 points.
The group added that its British Gas division saw operating profits slide by 20 percent last year to GBP 823 million, reflecting lower energy consumption due to warmer temperatures.
"Centrica has been hit on all fronts," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
"Lower consumption as a result of warm UK weather and falling energy prices have impacted on its British Gas supply business, whilst the drop in oil and gas prices is bad news for its expanded exploration division."
British Gas, along with Britain s biggest domestic energy providers, is currently facing a full-scale probe into the sector by the Competition and Markets Authority (CMA).
"The uncertainty raised as a result of the current competition investigation for both Centrica and its rivals further undermines confidence," added Bowman.
