Centrica pulls dividend, pauses Spirit sale

British Gas owner Centrica cancelled its dividend, cut capex and paused the planned sale of its Spirit Energy business to mitigate the impact of the coronavirus pandemic.

The company on Thursday reported a significant reduction in demand from business customers who had shut their shops after the government ordered lockdown.

“We also expect to see an increase in working capital outflows and customer bad debt, as certain customer segments defer payments due to the reduction of household incomes and business revenues,” Centrica said.

The company added that it would look to cut 2020 cash expenditure by around £400m compared to previous plans, including reductions in non-essential operating costs and the delay of capital and restructuring projects. Group capital expenditure including exploration and & production was now expected to be £200m lower at £600m.

“We are also engaged in constructive discussions with relevant governments and regulatory authorities to help ensure that appropriate protections are put in place for both the industry and customers during the pandemic,” Centrica said.

It also pulled guidance for the year as the impact of the oil price slump made forecasting impossible. The company said the fall in Brent oil prices would negatively hit E&P adjusted operating cash flow in 2020 by around £100m.

'We were due to receive initial bids for Spirit Energy around the end of March, however we have taken the decision to pause the process until financial and commodity markets have settled,' the company said.