Following a disastrous 2017, 2018 ended up – market-wise, at least – being something of a non-event for the British Gas-parent. Opening at £1.38 and closing at £1.35, it spent most of the year moving laterally between £1.40 and £1.60, only for a final quarter fall to erase the meagre growth it had managed to muster. 2019 has only carried over that trend, with Centrica PLC (LON:CNA) creeping up to a current trading price of £1.40.
The reason for that late-2018 slump was November’s trading statement, one that was riddled with issues. Firstly, its UK Home energy division is continuing to lose customers at an alarming rate, with 372,000 disappearing for the 4 months to the end of October.
Secondly, despite steps taken to minimise the impact of the Ofgem price cap – the number of customers that would be on the default tariff was reduced from 4.3 million to 3.1 million – it will still cause a one-off £70 million hit to its operating profit across the first quarter of 2019.
Then there were the problems in its nuclear and oil and gas businesses. Forecast production at Spirit Energy fell 5% to 47.5mmboe, due to ‘unplanned outages and operational issues’, while the Nuclear division was hurt by ‘extended inspections and outages at the Hunterston B and Dungeness B power stations’.
Finally, Centrica announced it was expecting full year adjusted earnings per share of around 11.5p, noticeably lower than the 12.8p that had been previously estimated. It did, however, say it expects to maintain its full year dividend at 12p per share.
Talking of that dividend, analysts at RBC Capital recently claimed that a cut to it is ‘inevitable’ due to the various sector obstacles, be it this year or the next. The state of the dividend may end up being the defining feature of Thursday 21st’s full year results, alongside any further details about the cost of the price cap.
Centrica PLC (LON:CNA) has a consensus rating of ‘Hold’ alongside an average target price of £1.42.
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