Centrica chief executive Iain Conn will leave the utility next year, it has been confirmed, after the company reported a near halving in operating profits.
Today’s results disclosure shows that Centrica’s adjusted operating profit for the six months ended 30 June fell by 49% year-on-year to £399 million, triggering a 58% cut to the interim dividend.
That performance was enough for Centrica to confirm that Conn has agreed to stand down as chief executive and retire from the board in 2020.
At the time of writing Centrica's share price had collapsed by more than 12% to 79.12p per share, its lowest price for more than 22 years.
Conn said that Centrica faced an “exceptionally challenging environment” in H1 2019, denting earnings and cash flows, but stressed the outlook was “more positive” for the rest of the year.
As a result, Centrica is standing by its full year group financial targets of operating cash flow in the £1.8 - 2 billion, and expects that momentum to continue into 2020.
News of Conn’s departure and Centrica’s overall performance may however overshadow the company’s announcement that it intends to exit oil and gas production entirely, shifting fully towards serving customers.
Conn said this would place more of a focus on Centrica’s “distinctive strengths” and allow it to help customers along a “transition to a lower carbon future”.
“This major refocusing of our portfolio will unlock further efficiencies enabling us to be even more cost-competitive, as we focus on being a leading energy services and solutions provider,” he said.
Customer numbers did slip by 178,000 in the first half of the year, coinciding with wider industry trends, but Centrica did note that energy supply accounts were on the rise in May and June.
This has prompted actions to improve the positioning of Centrica’s UK Home and Connected Home divisions, rebasing them and focusing specifically on the UK and Ireland markets, with the company’s home energy management outfit renamed Centrica Home Solutions.
It also intends to make further reductions in the cost base, targeting around £1 billion of efficiencies throughout 2019 - 2022, a significant increase on the £750 million initially targeted.
On Conn’s departure, Centrica chairman Charles Berry said that he had led the firm’s strategic repositioning and had been the “driving force” behind its plan to become a business “built around delivering clean, affordable energy and high-quality services and solutions for customers”.
“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.
“I would like to take this opportunity to thank Iain for his hard work and passion, and for his ongoing commitment to transforming Centrica into a business with a stronger foundation for sustainable growth."