British Gas owner Centrica’s chief executive Iain Conn is to step down from his post board next year. He made the announcement as the company posted a pre-tax loss of £446 million in the six months to June. The GMB trade union said Conn had ‘utterly failed’ and should go now, not later.
In a statement, Centrica plc announced that ‘Iain Conn, Group Chief Executive Officer, has agreed with the Board that he will step down as CEO and retire from the Board next year.
‘Today’s strategic update announcements mark an important moment in our transformation and we are now moving into a new phase, ready to exit our E&P businesses and fully committed to becoming a simpler and more focused, cost competitive customer facing business.
‘Iain will continue as CEO to drive the repositioning of the company’s portfolio and improve underlying performance as it continues to gain momentum. We anticipate that he will remain with the Company at least until the 2020 Annual General Meeting and provide his full support to help with the transition. The Board will plan succession accordingly and provide updates in due course.’
Charles Berry, Chairman of Centrica, 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 that is built around delivering clean, affordable energy and high-quality services and solutions for our customers, and to respond to the significant global challenge of moving to a lower carbon energy future.
“Iain has now agreed with the Board that, while he will continue to focus on driving this transformation, including pursuing the announced divestments and continuing to drive performance and efficiency, he will also support an orderly succession before stepping down in due course.
“I would like to take this opportunity to thank Iain for his hard work and passion, and for his ongoing commitment to transforming Centrica into a business with a stronger foundation for sustainable growth.”
Centrica reported a pre-tax loss of £446m in the six months to June. It made a £704m profit this time in 2018.
The firm is also cutting its dividend and selling its investment in oil and gas exploration and production, but is launching a new partnership with Ford.
Profit at the company’s consumer division, which includes British Gas, was down 44% to £240m. The company blames the impact of the government’s price cap, which was introduced at the start of 2019.
Profit at Centrica’s business division fell 89% to £11m, which Centrica said was attributable to warm weather and outages at its nuclear power stations.
The company’s shares fell by 19% and hit a 22 year low.
Mr Conn said: “Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows. We have also regrettably had to make the decision to rebase the dividend due to our changed circumstances including the UK energy price cap and increased demands on our cash flows, including additional pension contributions.
“The outlook is more positive for the second half of the year and we expect this momentum to continue into 2020, while we expect to meet our cash flow and net targets for 2019.
“Today, we have announced our intention to exit oil and gas production. This will complete our shift towards the customer, as we focus on our distinctive strengths, with an emphasis on helping our customers transition to a lower carbon future.
“This major refocusing of our portfolio will unlock further efficiencies enabling us to be even more cost-competitive, as we focus on being a leading Energy Services and Solutions provider.”
Responding to Centrica’s half term results, GMB Scotland Organiser Hazel Nolan said: “These results are another brutal chapter in the disastrous leadership of Iain Conn – he should go now and not later.
“It says everything that despite the massive losses, the share price has actually risen on the news of his departure next year.
“His plan to cut and gut his way out of this chaotic decline has utterly failed; its a vandalisation of this once great British institution.
“This isn’t just evidenced in the loss of over 4,000 jobs and 750,000 customers, but in the sub-contract of core workers and the offshore of call centre services.
“It doesn’t need to be this way. Gas is a sure thing as part of our energy mix – both for Scotland and the rest of the UK – the next generation and this business needs new leadership with a fresh vision and competent plan for the future.
“There is hope for the future with the right leadership and at the heart of this must be a commitment to invest in the direct labour force.
“The staff are the lifeblood of this once great business and are vital to the sustainability and future growth of the service.”
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