Centrica Share Discussion Threads

[gswredland] 22/11/2018 16:15

Chart looking bad and I think this has further to fall

[w1ndjammer] 22/11/2018 15:24

not to shabby a switch into SLA can the W formation play out

WJ.

[mitchy] 22/11/2018 15:20

Nice article from Motley fool on Centrica. I particularly like the reminder about reducing debt from £6 Billion to less that half that. That is exactly what I would have concentrated on...borrowing money costs money. By not increasing the dividend Conn is insuring that process will continue. That is all good for the company and will be good for the share holders.

"Another day, another big drop for the Centrica (LSE: CNA) share price.

The stock’s latest slump came after the company said it lost 372,000 customers in the four months to 31 October. Bosses also admitted that technical problems in its oil and nuclear businesses meant that output from both would be lower than expected this year.

Despite this, the firm said it’s on track to hit its financial targets for the year, including the dividend.

Today I want to look at the latest figures from Centrica in more detail. Should shareholders like me consider selling out, or is the group’s turnaround still on track?

There’s good news too

I’ll come back to Centrica’s disappearing customers in a moment. First, I want to take a look the financial figures from today’s update. These suggest to me that chief executive Iain Conn is making concrete progress with his turnaround plans.

The company said that thanks to £200m of cost savings this year, it remains on track to hit 2018 targets for adjusted operating cash flow of £2.1bn-£2.3bn and net debt of £2.5bn-£3bn. Adjusted operating profit is expected to be “higher than in 2017”.

In turn, this means that the full-year dividend of 12p per share should be safe, giving a forecast yield of 8.9% at current levels. So it’s good news (for now) for income seekers.

Losing customers isn’t so bad

It’s worth remembering how the energy market has changed in recent years. Dozens of new small suppliers have started up, with the aim of taking customers from the big six energy firms.

Losing 372,000 home customers in four months isn’t ideal. But management said that some of these customers have left as a result of “our continued focus on value over volume”. Others have left as a result of the group’s efforts to reduce the number of customers on the Standard Variable Tariff.

I estimate that Centrica should still have about 23.7m home energy supply customers. I think that should be enough to provide serious economies of scale, in a properly-run business.

Turnaround: part two

It’s easy to forget that when Mr Conn took charge at the start of 2015, the group had net debt of more than £6bn. Cutting borrowings by more than 50% while stabilising the business is a significant achievement.

To complete his turnaround, he must find some way of returning the group to growth. This doesn’t necessarily mean more customers. It may mean selling additional services to existing customers, or creating new opportunities.

The firm’s Connected Home service is an example of this. British Gas’s Hive products enable customers to control their home’s heating and lighting through their smartphone from anywhere. Customer numbers rose by 280,000 during the four months to 31 October.

The group’s Distributed Energy & Power business is another area of growth. This business provides services that help balance supply and demand between renewables, conventional power and business customers. Orders have doubled so far this year.

Buy, sell or hold?

I think Centrica has a strong future. But it’s not yet clear how quickly the company will be able to return to earnings growth. I believe there’s still a risk that the dividend will be cut.

Trading on 10 times earnings with an 8.9% yield, I’d rate the shares as a turnaround buy for risk-tolerant investors."

[portside1] 22/11/2018 14:17

the directors do not give a toss they come and go . paying out 9% div is putting two fingers up to customers , they will lose thousands more . directors need to be removed and put in people who want to run the company better and keep customers

[portside1] 22/11/2018 14:14

tim I pay 33 a month then a further two more homes I pay for
I am looking to dumping next year , I have never called them out in the last 10 years then I called them to do my yearly service in jan to have it serviced end of march I had to wait till mid may , they said their were to busy I gave them 3 months notice

[diku] 22/11/2018 12:44

Does anybody know the reasoning for the lose of 372,000 customers...is it mainly tariff pricing or other?...are insiders out of touch with reality paying nearly 9% divi...this is not financial prudent...

Bonuses all round and freebie share options for insiders!....

[losses] 22/11/2018 12:35

The stock's latest slump came after the company said it lost 372,000 customers in the four months to 31 October. Bosses also admitted that technical problems in its oil and nuclear businesses meant that output from both would be lower than expected this year.

[yump] 22/11/2018 12:15

strutt12

So you're buying despite your forecast of the £70mln hit to operating profit, causing a 50% profit drop next year ?

Interesting strategy.

[strutt12] 22/11/2018 11:55

Cheers Chump ;-) thanks for your confidence, I have been investing heavily, I bought this morning @ 132p but not sure how you benefit from my purchase?

[nortic 007] 22/11/2018 11:21

April fools :)

[yump] 22/11/2018 11:19

Are you just winding me up ?
Your second figure is for a half year.

In the words of John McEnroe...

Actually, I've changed my mind. You should carry on investing heavily. The more folk like you, the more dosh I make.

[yump] 22/11/2018 10:31

22 Feb 2018 - Full year results:

"Adjusted operating profit down 17% to GBP1,252m"

Please, please, please go and see an accountant to explain what is what in published accounts, before you invest any money, anywhere.

You have to take the £70mln of operating profit hit, off a year's operating profit, otherwise its totally meaningless.

[capeview] 22/11/2018 10:05

Hmm, seems we're at the bottom of the barrel again and feels almost like Groundhog Day all over again. :D

[hifc231] 22/11/2018 09:57

This Circus act is getting old, waiting for this share to trade in the range it should be(£2.20-£2.60 opinion) is taking to long. There must be some Labour supporters in the finance world keeping this low ready for when the communists get into power.

[jeannettetigger] 22/11/2018 09:57

Exactly yump, postings on here as well as other boards should be taken with a pinch of salt!

[yump] 22/11/2018 09:42

Unless you've just done a typo, my advice is not to invest in anything.

Last full year operating profit was £1,200mln+.
Since when was £70mln 50% of £1,200mln ??!!

That hit is neither here nor there.

What's important now is whether the bad news is all in the price, particularly as they've achieved this year's result despite all sorts of problems.

[strutt12] 22/11/2018 09:25

So the price cap is expected to result in a one-off negative adjusted operating profit impact of around GBP70m in the initial period of the cap in the first quarter of 2019.

That's a drop in profit for next year, on top of this we have:

The General Court annulled the European Commission's decision not to raise objections to the state aid scheme establishing an electricity capacity market in the UK. We are currently awaiting further updates from the Department for Business, Energy & Industrial Strategy in order to determine the full implications for the capacity contracts in place for our Nuclear, battery and gas-fired generation assets, and for our UK energy supply businesses and the associated allowances for capacity market charges.

Financial inpact as yet unknown

[tim 3] 22/11/2018 08:59

portside122 Nov '18 - 08:48 - 15071 of 15075

Thats exactly what they did with my dad charging him a mouthwatering £40 a month for central heating cover.

[w1ndjammer] 22/11/2018 08:56

nice divi but zero prospects of growth, better opportunities out there......

WJ.