|Bid||66.18 x 0|
|Ask||66.20 x 0|
|Day's Range||64.80 - 66.30|
|52 Week Range||63.99 - 156.65|
|Beta (3Y Monthly)||0.46|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||0.10 (15.11%)|
|1y Target Est||N/A|
(Bloomberg) -- Britain’s retail energy market shakeout is accelerating as more suppliers hit the wall two months after the regulator clamped down on lax management and poor customer care.Ten natural gas and electricity providers have folded in the last 12 months, including two in the past fortnight. That highlights the difficulties of being a small energy company in a crowded market under increasing scrutiny from policy makers.The jump in failures is the downside of U.K. government efforts to boost competition in an industry traditionally dominated by six companies. That’s led to a market flooded by small and medium-sized suppliers offering cheaper and more flexible tariffs for energy. Some of those are falling victim to volatile wholesale prices, high running costs and providing poor customer service.“There will be more consolidation,” said Hayden Wood, the chief executive officer and co-founder of Bulb Energy Ltd., which had a 4% share of electricity supply market by the end of the first quarter. His company has invested in technology to “provide something that is different to what the smaller suppliers can.”In 2006 there were just 10 energy suppliers operating in the U.K., ballooning to more than 70 last year, according to regulator Ofgem. That number fell below 60 this month when Cardiff Energy Supply Ltd. and Solarplicity both ceased trading. URE Energy had its license to supply electricity revoked on Thursday after failing to meet its renewable energy obligations.Ofgem brought in more stringent entry requirements for new suppliers in June, including tighter funding requirements, providing a customer service plan and passing a “fit and proper” test.“The large number of small energy suppliers and the harsh way the market is regulated make it difficult for companies like Solarplicity to survive,” Solarplicity said in a statement on its website this week.It’s not just small suppliers feeling the pinch. The stranglehold that the “Big Six” utilities have had on the British market has been chipped away as customers have fled in their millions to smaller firms that offer cheaper and often greener tariffs.Centrica Plc ’s British Gas, which 15 years ago controlled a quarter of the domestic electricity market, now has a 19% market share. Its slice of the gas market has fallen from over 50% to 28%.Firms such as Bulb, Octopus Energy and Ovo Energy Ltd. have benefited from the disruption as has Royal Dutch Shell Plc’s Shell Energy who entered the market by acquiring First Utility.Another Big Six supplier, SSE Plc, is in talks with Ovo to sell its battered retail unit, which has been on the block since a deal with Innogy SE’s Npower fell through in November. Meanwhile, Centrica CEO Iain Conn will step down after a tenure that has seen two-thirds of of the company’s value lost and millions of customers walk away.The disruption “will be good for customers, the next generation of supplier will be serving so much more to the customer,” Wood said.To contact the reporter on this story: Jeremy Hodges in London at email@example.comTo contact the editors responsible for this story: Reed Landberg at firstname.lastname@example.org, Andrew ReiersonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Reality is beginning to bite in the FTSE 100 as some high-yielding stocks give up on generous dividends. But many British companies are still continuing to offer jaw-dropping payouts when what investors really crave is growth.The dividend culture of the FTSE 100 has long been an oddity. Its investors have received a far higher proportion of their total returns from income over the last two decades than if they had invested in, say, the S&P 500 over the same period.With dividends a very British symbol of corporate confidence, boards are reluctant to cut them even when it might be wise to do so. So the FTSE 100 culture has been self-reinforcing.This year has brought some signs of change. Centrica Plc slashed its payout last week. Analysts had expected the utility to announce a deep cut, but not by nearly 60%. Vodafone Group Plc snipped its dividend in May. And last month, tobacco giant Imperial Brands Plc dropped a commitment to grow its payout 10% annually.Yet even now, these companies’ share prices look superficially cheap on a dividend basis, with yields (the dividend divided by the share price) of between 6% and 10%.Indeed, such ratios are nowadays pretty common in the U.K. The average dividend for the top 15 highest-yielding stocks is worth 9% of the share price. The standard explanation – that this signals dividend cuts in the coming years – doesn’t fit very well. Take analysts’ predictions for dividends in three years; even with some cuts forecast, the average yield for this group is still 9%.This is especially odd in a low-rate environment. Yields on some government bonds and high-rated corporate debt are negative or zero. Surely income investors would buy these dividend stocks if the return provided by their annual cash payouts was only 5% rather than double that level? Wouldn’t that provide sufficient compensation for the added risk?One explanation is simply that international investors just don’t care for yield anymore. Domestic U.K. income funds probably would be willing to pay more for these stocks and bid down their yields. But this group isn’t driving the market. Global investors are. They covet growth and don’t want exposure to the U.K. until there’s clarity about Brexit. The average expected increase in sales over the next two years for the top-15 yielding U.K. blue-chip stocks is under two percent. Of course, if the companies aren’t growing, it’s likely because of past under-investment caused by overly-generous dividends. But cutting dividends now to invest in growth won’t pay off for some time and would only infuriate the small pool of domestic investors who actually like the income. Meanwhile, global investors sit on the sidelines and company managers stand frozen like a deer in the headlights.To contact the author of this story: Chris Hughes at email@example.comTo contact the editor responsible for this story: Stephanie Baker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Moody's Investors Service (Moody's) has today changed to negative from stable the outlook on Centrica plc (Centrica). Concurrently, Moody's has affirmed the Baa1 issuer and senior unsecured ratings, and the Baa3 junior subordinated debt ratings of Centrica.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Centrica Plc said its chief executive officer will step down after a tumultuous five-year run at Britain’s largest energy supplier, which has lost two-thirds of its value and millions of customers during his term.Iain Conn, 56, announced his departure along with Centrica’s first dividend cut since 2015. He will leave the board in 2020 after he finishes an effort to fortify the utility against increasing competition and a government cap on what it can charge for its electricity and natural gas.Centrica shares fell as much as 13% in London to the lowest since 1997, the year the utility was spun out of the state-owned British Gas. Conn inherited a company that had under his predecessors diversified into oil and gas production and nuclear energy, businesses that Centrica now intends to sell.In more recent years, smaller rivals have lured away tens of thousands of customers from Britain’s Big Six utilities. Centrica earnings were also hit in the first half as warm weather and operational issues cut its electricity supply by 4%.Conn said his departure was a mutual decision with the board and the result of months of discussions. Conn is seeking to hand over a smaller entity focused on customer-facing businesses supplying power and energy services. The board will name a successor later.While the company’s share price plunged to new lows, Conn said the company was on the right track and seeing the beginning of stabilization. He said the earnings outlook is brighter for the rest of the year.“This set of steps is a fundamental re-positioning of the company and is the end of a journey we began in 2015,” Conn said on a call with reporters Tuesday. “We haven’t changed our strategy. We’ve made some adjustments, but the board has confirmed we need to keep going toward the customer.”Unions were quick to criticize Conn’s plan to maintain the pace of job cuts he announced in February and step up a cost savings target.Centrica is targeting 1 billion pounds ($1.2 billion) of annual cost savings from this year through 2022, up by 250 million pounds since February. The company maintained its estimate that it will shed 1,500 to 2,000 jobs this year from the some 30,520 it had at the end of 2018.“More of the same, more job cuts on top of the thousands already gone and going, are panic measures, not a credible plan for recovery,” said Justin Bowden, national secretary of the GMB union. “There must be a pause under a new CEO, investment and a new plan for growth.”Dividend CutThe board proposed an interim dividend of 1.5 pence a share, down from 3.6 pence for the same period a year ago. For the full year, the dividend will be cut to 5 pence a share, down from 12 pence in the last four years.“The departure of Centrica’s CEO won’t resolve all of its problems, in our view, as many are outside management’s control,” Elchin Mammadov, analyst at Bloomberg Intelligence, wrote in a note. “The new team at the helm will need to focus on delivering further cost cuts and growth in energy supply and services.”Customer numbers in Centrica’s main energy supply and services business fell 2% to 23.6 million in the first half of the year. Output from its 20% stake in Britain’s nuclear plants fell 19% in the first half to 4.9 terawatt-hours, reflecting outages at the Dungeness B and Hunterston B power stations.“Centrica faced an exceptionally challenging environment in the first half of 2019, which impacted earnings and cash flows,” Conn said in a statement on Tuesday. “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.”Looking AheadConn maintained guidance for full year earnings. Nuclear plant outages that hit earnings in the first half are likely to pass, and cost savings set to kick in.Centrica expects growth in its consumer businesses. In its connected homes business, growth accelerated 49% to 1.5 million.In the months ahead, Centrica will work on selling its Spirit Energy unit, which produces oil and natural gas. It’s already divesting its stake in nuclear power plants, although the statement on Tuesday said nothing new about that process. Conn said Centrica will exit Spirit via a trade sale and use proceeds to restructure the company.“We are completing the shift we began in 2015 from a company ill-equipped to deal with changes in the energy systems to one in tune with moving toward a lower-carbon economy,” Conn said. “Once we’ve made them, it is now time for me to hand over to a successor.”Along with its shift toward a more customer-facing business, the company also wants to make money off the expansion of electric vehicles. It announced a new partnership with Ford Motor Co. on Tuesday to develop charging stations at hundreds of dealerships across the U.K. and Ireland as well as sell home charging equipment and electric vehicle tariffs.The company is in talks with other car companies to expand further into this area, Sarwjit Sambhi, head of Centrica’s consumer business, said on a call with reporters.Get More1H revenue 11.57 billion pounds1H adjusted operating profit 399 million pounds1H net debt 3.38 billion poundsExpects to Meet Cash Flow , Net Debt Targets for 2019A challenging environment in H1 2019 impacted adjusted earnings and adjusted operating cash flow2019 full year adjusted earnings expected to be weighted towards H2Continue to expect to meet 2019 full year group financial targets, including adjusted operating cash flow in the range 1.8 billion to 2 billion pounds and net debt in the range 3 billion to 3.5 billion pounds2019 full year expected dividend rebased to 5.0 pence per share reflecting changed circumstances, including the UK default tariff price cap, and additional pension deficit contributions and restructuring chargesRead the statement here.(Adds chart, details on Conn’s departure, asset sales and electric vehicles.)To contact the reporter on this story: William Mathis in London at email@example.comTo contact the editor responsible for this story: Reed Landberg at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Centrica Plc results included a “litany of negatives,” analysts at JPMorgan wrote after the British Gas-owner cut its dividend for the first time since 2015. Shares fell as much as 12%, and RBC Capital Markets said that today’s announcement may not mark the bottom for the stock.The shares fell to the lowest in 21 years after first-half profit missed expectations, with the company’s U.K. domestic energy supply unit still facing a tough market. Still, the departure of chief executive officer Iain Conn may pave the way for a new strategy, JPMorgan said.Here’s what analysts had to say about the results:JPMorgan, Christopher Laybutt(Neutral)Despite prepping the market for a potential dividend cut earlier in the year, the actual cut still “remarkably” came in below expectationsKey positive was that CEO Iain Conn will step down in 2020, paving the way for a “fresh perspective on strategy”But this will be offset by the “litany of negatives” in the earnings release RBC, John Musk(Underperform)Much of what the results contain was expected but that doesn’t mean there isn’t further downside for the shares; “we don’t think today’s announcements necessarily signal the bottom in the share price”Company maintained its guidance but if rebased for disposal of nuclear and E&P assets, earnings per share should be lower for the yearNothing in the earnings to signal a “reversal in fortunes”Morgan Stanley, Timothy Ho(Underweight)Rebased dividend to 5p for the full-year is lower than consensus expectations, which had generally anticipated a cut to around 6pWould expect to see more pressure on full-year earnings estimates given Centrica is flagging heavy weighting to the second halfJefferies, Ahmed Farman(Hold)Ebit for first half is 20% lower than consensus due mainly to losses in Centrica’s North American business, lower gas prices and writedownsDividend also cut by more than Jefferies had anticipated and the company’s U.K. domestic energy supply remains tough, though churn in this unit may be starting to moderate\--With assistance from Lisa Pham and Blaise Robinson.To contact the reporters on this story: Sam Unsted in London at email@example.com;Ivan Edwards in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Mellor at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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IBM and British start-up Cera Care plan a six-month pilot to test whether lidar laser sensors, used to help self-driving cars "see", can enable elderly people to stay in their homes for longer - without compromising privacy. Lidar systems that work by using laser light pulses to render fine-grained images of surroundings, have typically been used to make high-resolution maps, catch speeding motorists and more recently help automated cars navigate through the streets. Jack Narcotta, a senior smart home analyst at Strategy Analytics, said lidar lasers were one of the more advanced solutions for elderly monitoring, but were still in the very early stages.
British utility stocks are trading at a growing discount to euro zone peers as investors fear the country's deepening political crisis could trigger a general election that ushers in renationalisation of the industry, worth $76 billion (£59.9 billion). The opposition Labour Party has said it wants to nationalise energy and water infrastructure if it can oust Prime Minister Theresa May's Conservatives from power, reversing decades of pro-privatisation policies. Simon Webber, lead portfolio manager on the global and international equities team at Schroders said those fears were "another overhang" for utilities, already subject to a discount like other UK assets because of Brexit uncertainty.
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