Centrica Shares Suffer Biggest One-Day Fall Ever on Profit Warning -- Update
November 23 2017 - 5:54AM
Dow Jones News
(Adds share movement and further details on earnings.)
By Adria Calatayud
Shares in British utility company Centrica PLC (CNA.LN) suffered
their biggest intraday drop ever on Thursday, falling by more than
16% after the company issued a profit warning for 2017.
The owner of British Gas expects full-year adjusted earnings per
share of around 12.5 pence, below market consensus it said. This
compares with adjusted EPS of 16.8 pence last year.
Lower-than-expected adjusted operating profits in both its North
America and U.K. operations have affected the company's performance
in the second half, it said, as has the unusually warm weather both
regions experienced in October and November.
The reduced earnings forecast also reflects a one-off, non-cash
charge of 46 million pounds ($61.1 million) in its North America
business unit, Centrica added. Centrica estimates that this one-off
charge--related to a reassessment of the historic recognition of
unbilled power revenue--will have an impact of 0.8 pence a share in
2017.
Shares in Centrica were down 26.70 pence, or 16%, to 136.60
pence at 0939 GMT, topping the list of FTSE 100 losers.
"Earnings guidance has been slashed with management now guiding
earnings per share at 12.5 pence for 2017, significantly below the
15-pence consensus--which was already pretty low--before today's
update. The stock's fall is pretty much in line with the 16% drop
in EPS guidance," ETX Capital analyst Neil Wilson wrote in a
note.
Centrica said that the second-half performance of its businesses
segment was disappointing. The retail power book of its North
America business unit faced market pressures, while improved
operational performance in the U.K. hasn't translated in higher
earnings as was expected.
"Although some aspects of our delivery in the second half of
2017 have been disappointing, I remain encouraged by our progress
in implementing our strategy," Centrica Chief Executive Iain Conn
said.
As Centrica continues its restructuring program, it said that it
is on track to achieve its 2017 targets. Centrica raised its
full-year efficiency-savings objective to GBP300 million from
GBP250 million, and backed the rest of its 2017 targets for
operating cash flow, investments and net debt.
In the company's consumer segment, energy-supply accounts have
fallen due to its focus on customer value, it said, adding that
trading conditions continue to be highly competitive.
Write to Adria Calatayud at
adria.calatayudvaello@dowjones.com
(END) Dow Jones Newswires
November 23, 2017 05:39 ET (10:39 GMT)
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