Centrica, the owner of British Gas, has said its chief executive, Iain Conn, is to step down next year, as it slashed its dividend after a first-half loss.
The former BP executive said he had agreed to step down from the company, after almost five years in the role, by next year’s annual general meeting.
The company announced the departure alongside worse than expected financial results for the first half of the year and a deeper than expected dividend cut for investors, which include about 600,000 individual shareholders.
Conn said he “agreed with the board that this is the right thing to do” after “months of talks” over the company’s future.
He has faced rising pressure to step down after a steady decline in the company’s market value, which is now a quarter of what it was when Conn took the reins in 2015.
Conn said he had reinvested most of his bonus payouts in the company while he worked to overhaul the strategy of the “ill-equipped” energy giant by shifting its business towards selling energy services and devices.
Many City analysts are unconvinced that the plan can bear fruit after a series of disappointing financial results for Centrica in recent years.
The company posted a pretax loss of £569m for the six months to 30 June compared with a profit of £415m last year, and it slashed its interim dividend by 58% to 1.5p a share. It said the full-year dividend total will also be cut by 58%, from 12p to 5p a share.
The swing to a pretax loss is the latest blow to the owner of Britain’s biggest energy supplier which was already planning to sell its nuclear, oil and gas business units to pay off its debts and cut thousands of jobs from its shrinking workforce.
The company’s share price fell by 12% following the latest set of results to hit 21 year lows of around 79.5p a share on Tuesday.
Conn’s departure follows a row in April over his £2.4m pay package, which climbed by 44% from the year before despite a difficult year that included higher household bills and plans for 4,000 job cuts. Between 1,500 and 2,000 jobs will go this year.
Centrica blamed an “exceptionally challenging” environment in the first half of 2019, including the government price cap on standard energy tariffs and additional pension contributions.
“It has been an exceptionally challenging first half with some really difficult circumstances,” Conn said. “Our results were weak.”
The group took a pretax charge of £346m in the first half. This included £257m of restructuring costs, £64m one-off pension costs and asset writedowns of nearly £90m, partly due to the fall in near-term gas prices.
But Conn said the company “has momentum” which should see a return to growth in the second half of the year and into 2020.
Conn said Centrica’s new deal with Ford to provide electric vehicle tariffs and charge points was an example of “where we are moving to” in the future.
Charles Berry, the chairman, said: “Iain has led the strategic repositioning of Centrica since 2015 and has been the driving force behind our plan to turn Centrica into a sustainable business.”
It said the outlook was more positive for the second half of the year and this would continue into 2020. It also stuck to its cashflow and debt targets for this year.
Centrica said it would exit oil and gas production to focus on customers, and expects to sell its last major asset, its stake in the oil and gas venture Spirit Energy, by the end of 2020.
It lost 178,000 UK home energy supply accounts in the first half, and said it would revamp its home business including further cost cuts.