Boss of British Gas owner Centrica to step down
The group also announced a slashed dividend and its exit from oil and gas production.
The boss of British Gas owner Centrica is to leave his role next year, amid a dramatic overhaul of the company’s strategy.
The group confirmed Iain Conn’s departure as chief executive alongside an announcement that it would exit the production of oil and gas as it targets further cost savings.
Shares in the firm dropped more than 10% in early trading as it revealed a near-60% cut to the interim dividend.
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.”
Mr Conn faced criticism from unions in April for his 44% pay rise in the same year the company announced job cuts affecting up to 4,000 people.
Centrica said on Tuesday that it would now target an even larger cost reduction, aiming for £1 billion annualised efficiencies over the 2019-2022 period, up £250 million on previous estimates.
This will be achieved through the refocusing of the portfolio on to customer-facing services, but the company also said it had identified more opportunities for savings, including right-sizing its management structure and reviewing its property footprint.
On a call with the media, Mr Conn said there could be a “material” impact on jobs as a result of the changes, but insisted he did not yet know the details.
Meanwhile, Centrica said it would rebase its dividend due to the “challenging environment” in the first half of the year.
The interim dividend was slashed by more than half to 1.5p per share, while the full-year expected dividend was rebased to 5p per share.
Accounts showed the company swung to a statutory pre-tax loss of £446 million in the six months to June 30, compared with a £704 million profit this time last year.
Adjusted revenue dropped 2% to £13.8 billion, while underlying earnings fell 19% to £1.08 billion.
In the core energy supply and services division, customer numbers dropped by 409,000, but growth in the connected home division accelerated with the addition of more than 500,000 accounts.
Centrica said it had been affected by the UK energy price cap and increased demands on its cash flows, including additional pension contributions.