The unloved CEO is leaving, the shares yield 6% despite a dividend cut, but no one's buying yet.
After two dividend cuts and a 70% slide in share price, long-suffering Centrica (LSE:CNA) investors probably won't want to hear departing boss Iain Conn's verdict on his reign since 2015.
While Conn said he was "very proud" of what his Centrica team had achieved in restructuring the company in the past five years, the painful truth for investors is that shares are now close to where they were when it was created out of the British Gas demerger in 1997.
The lack of bargain hunting this morning, following a 15% slide in share price, suggests there are not too many investors brave enough to venture into the wreckage of today's interim results and strategy announcement. That's despite Centrica finally getting the bad news out the way with the inevitable rebasing of its dividend after two years of intense speculation.
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The proposed cut in the full-year pay-out to 5p a share from 12p earlier this year was more than many City analysts had expected, although Conn points out that the cash reduction is actually 50% when taking into account plans to cancel the scrip dividend alternative.
Not that £5 billion-valued Centrica will be a FTSE 100 stock much longer if the current trends continue. The company's half-year results revealed a steep 63% decline in earnings per share to 2.4p, which missed consensus by about 20%.
This was blamed on everything from the UK's default tariff price cap to low UK natural gas prices, outages at Hunterston B and Dungeness B nuclear power stations, and warmer than normal weather in both the UK and North America.
The hope is that this will be as bad as it gets for Centrica. Certainly, there's some cause for optimism after today's outlook statement said second-half earnings were expected to be much better.
This reflects growing cost efficiencies and the return to service of the two power stations, as well as a strong forward order book for its North America Business.
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"These factors will also benefit 2020, along with growth momentum we are seeing in a number of our customer-facing businesses."
The company is also progressing plans to sell its 69% stake in oil and gas exploration venture Spirit Energy, as well as minority holdings in a number of UK nuclear plants, in order to raise an estimated £2 billion towards cutting debt.
This repositioning will give Centrica a much better focus on its UK consumer businesses, although that's no guarantee of a smoother ride given recent volatility in the industry. British Gas energy supply customer accounts fell by 178,000 in the half-year, driven by high levels of customer churn in March and April after a rise in the level of the default tariff cap.
The aim now is for Centrica to build a progressive dividend policy based on cover of between 1.5 and 2 times earnings in the medium-term, which analysts said could imply an earnings per share of up 10p by 2020/21. Today's interim dividend was reduced 58% to 1.5p.
Even with today's cut, the stock offers a tempting 6% dividend yield for new investors. The stock had yielded 14% ahead of today's results and after recent heavy share price falls.
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"With a cash dividend confirmed, investors now have some motivation to wait around and see what happens next. Yet still we would not get too excited: once again the update highlights the unpredictability of Centrica's business mix."
UBS has a 'neutral' stance on the stock and a price target of 110p.
Centrica is thought to have more than 600,000 retail investors. Shareholders who bought British Gas shares as part of its privatisation in 1986, and have made no sales or purchases since then, now have stakes in Centrica, National Grid (LSE:NG.) and Royal Dutch Shell (LSE:RDSB).
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