CPYYY Centrica Plc (PK)

--Centrica said it will cut its 2019 dividend to 5 pence a share from 12 pence in 2018, exit oil-and-gas production and target further cost savings

--Chief Executive Iain Conn plans to step down from his role next year

--Shares in the owner of British Gas fell sharply on the back of the news, sending the stock to a two-decade low

By Adria Calatayud

Shares in Centrica PLC (CNA.LN) fell Tuesday after the British Gas owner said that it plans to slash its 2019 dividend by 58% and exit oil-and-gas production, and that Chief Executive Iain Conn intends to step down next year.

The FTSE 100-listed utilities company launched plans to step up its restructuring efforts and refocus its portfolio on customer-facing activities, as it hopes to revive its fortunes after taking a hit from an energy-price cap imposed by the U.K. government.

The company said it will complete its shift toward focusing on customer-facing businesses by divesting its oil-and-gas production assets, a move that follows its intended exit from nuclear-power generation. Divestment proceeds will be used to fund restructuring costs and underpin its balance sheet, it said.

Centrica said it targets 1 billion pounds ($1.23 billion) in cost savings over the 2019-2022 period, GBP250 million more than previously planned. This will require cash restructuring expenditure of around GBP1.25 billion, the company said.

The company said it will partly fund restructuring costs through a cut to its full-year dividend to 5 pence a share from 12 pence a share.

Mr. Conn will remain with the company at least until next year's annual general meeting to lead the repositioning of its portfolio, having joined the group in January 2015, Centrica said.

Centrica shares at 1034 GMT dropped 15% to 76.94 pence, which would be the company's worst one-day percentage fall ever, and sent the stock to a 21-year low.

Centrica reported a swing to a pretax loss of GBP569 million for the first half compared with a profit of GBP415 million in the year-earlier period. The company attributed the loss to lower adjusted earnings and remeasurements due to falling gas prices. Centrica posted a net loss of GBP550 million compared with a profit of GBP238 million a year before.

Adjusted earnings attributable to shareholders fell by 63% to GBP134 million, the company said.

Revenue fell to GBP11.57 billion in the first half from GBP12.10 billion a year before, the company said.

Centrica declared an interim dividend of 1.50 pence a share, down from 3.60 pence a share in the first half of 2018. The company backed its full-year guidance and said adjusted earnings will be weighted toward the second half of the year.

Write to Adria Calatayud at adria.calatayudvaello@dowjones.com

(END) Dow Jones Newswires

July 30, 2019 07:00 ET (11:00 GMT)

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