UK-based oil and electricity business Centrica’s share price has dropped from 137.7p to around 120p after chief executive Iain Conn announced that the company’s operating cash flow “was under serious pressure”.
Conn told the Financial Times the energy price cap and a lower-than-expected income from Centrica’s stake in EDF’s nuclear reactors were reasons Centrica would struggle to meet its 2019 operating cash flow target.
Centrica has looked to offset this by targeting £500m in divestment sales, £230m of which has already been raised by the sale of Clockwork Home Business in America.
Centrica’s financial results, published Thursday, showed that the company’s revenue rose by 6% to £29.7bn, with an operating profit of just under £1.3bn. Currently, the company’s operating cash flow stands at just over £2.2bn and its net debt has risen by 2% to around £2.7bn, both of which were within Centrica’s predicted range.
Conn said: “Centrica’s financial performance in 2018 was mixed against a challenging external backdrop. At the headline level, adjusted operating profit was up 12% and adjusted operating cash flow and net debt were within our target ranges.
“However, volumes in Spirit Energy and Nuclear were disappointing and recovery in North America Business was slower than expected. Our 2019 financial performance will be impacted by the UK default tariff cap and continuing lower volumes in E&P and Nuclear, meaning our 2018-20 target range for average adjusted operating cash flow is under some pressure.
“We are taking actions to strengthen the company in 2019 and improve underlying performance in 2020, including driving cost efficiency hard and delivering further divestments, and as a result, net debt levels remain underpinned.”