UK Centrica Restructures, CEO to Quit

Centrica CEO Iain Conn is to step down and retire from the board next year, the company said July 30 as it announced more losses and the planned sale of its stake in majority-owned upstream arm Spirit Energy as well as its nuclear power business. The revenues will be used to fund restructuring costs and underpin balance sheet to ensure strong investment grade credit rating, it said.

While revenues for the first half of the year were down just 2% at £13.8 ($16.8bn), earnings before tax, interest and depreciation were down 19% at £1.075mn and adjusted operating profit was down 49% to £399mn.

Its energy supply accounts were down 178,000, but with growth in May and June, it said. UK services accounts were up 140,000 and it expects its full year adjusted earnings to be weighted towards H2, "providing momentum into 2020." It has not revised its full year group financial targets, including adjusted operating cash flow in the range £1.8bn-£2.0bn and net debt in the range £3.0bn-£3.5bn.

But the 2019 full year expected dividend has been rebased to 5.0p per share reflecting changed circumstances, including the UK default tariff price cap, and additional pension deficit contributions and restructuring charges. 

Conn will continue as CEO to drive the repositioning of the company’s portfolio and improve underlying performance as it continues to gain momentum, at least until the 2020 Annual General Meeting, Centrica said. He will "provide his full support to help with the transition. The Board will plan succession accordingly and provide updates in due course."

Thanking Conn, Centrica 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."