(Reuters) - Centrica CEO Iain Conn will step down next year after the company cut its dividend and announced plans to exit its oil and gas business, sending its shares to a 21-year low.
Centrica has been shifting towards consumer energy services and away from oil and gas exploration and large-scale power generation, as part of a move away from fossil fuels.
As well as supplying energy, Centrica plans to build up its connected home and energy services divisions, offering products like smart thermostats to control home heating via a phone app and electric vehicle products.
But the market remained unconvinced by the transition plans.
Centrica shares were down more than 10% below 80 pence per share, having fallen almost 70% since 2015 under Conn’s tenure.
“The results were even worse than expected, and the problem everyone has now is when its left with this consumer facing business what is that actually going to be worth?” said Peter Atherton, an associate at consultancy Cornwall Insight.
“It has a raft of these newish products but in five years or so its competition could be Apple or Amazon, so will it be able to make profits on these products?” Atherton said.
Conn said a cut in the dividend was necessary after Britain’s energy regulator Ofgem capped prices in January, while additional pension contributions were among other increased demands on the company’s cash flow.
The interim dividend of 1.5 pence is less than half the 3.6 pence awarded in the first half of 2018, while the full-year 2019 dividend will be cut to 5 pence, lower than the 6 pence predicted by most analysts.
Centrica, the owner of Britain’s largest energy supplier, British Gas, lost 178,000 customer accounts during the first half of the year but said account numbers began to rise in May and June.
Centrica reported a statutory loss of 446 million pounds for the six months to end June versus a profit of 704 million in the same period last year.
Conn has been under pressure from shareholders because of the company’s poor performance. Trade unions have also criticised his 44% pay rise to 2.4 million pounds last year amid a restructuring that included thousands of job losses.
Conn said he would step down in 2020.
Earlier this year, the company said it expected to cut between 1,500 and 2,000 jobs on a like-for-like basis in 2019, as a part of the 4,000 cuts to 2020 announced last year.
Conn told reporters more jobs cuts could be announced with the company’s full-year results next February as part of a further 250 million of cost cuts announced on Tuesday.
Centrica had said earlier this year that the cap on standard energy prices, ordered by former Prime Minister Theresa May, would lead to a 300 million pound hit to profits in 2019, including a one-off impact of about 70 million in the first quarter of 2019.
Centrica said it planned to exit its oil and gas exploration and production business Spirit Energy by the end of 2020, most likely via a trade sale. Analysts value the business at around 1.5-1.8 billion pounds.
Centrica also hopes to sell its 20% stake in Britain’s nuclear power plants by the end of 2020.
Centrica also said on Tuesday it would partner with automaker Ford to offer home charging installations for Ford’s electric vehicle customers.
Reporting by Susanna Twidale, additional reporting by Yadarisa Shabong in Bengaluru; Editing by Anil D'Silva, Louise Heavens/Kirsten Donovan/Jane Merriman