Centrica revenue dips but results remain strong
Energy and utility services company Centrica posted its preliminary results for the year to 31 December 2016 on Thursday, with adjusted operating profit and adjusted earnings both up 4% to £1.52bn and £895m respectively, and adjusted earnings per share falling 2% to 16.8p.
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The FTSE 100 firm posted a revenue decline of 3% to £27.1bn, while adjusted operating cash flow was up 19% to £2,686m, which included a £357m working capital inflow in the UK business.
Underlying adjusted operating cash flow growth of 14%.
The company said its efficiency programme delivered £384m of cost savings and an over-3,400 like-for-like reduction in direct headcount in 2016, with both measures ahead of target.
A further £250m of efficiency programme delivery was expected in 2017.
The exploration and production division’s £166m free cash flow positive reflected reduced capital expenduture and lower cash production costs, the board explained.
Net debt was down 27% to under £3.5bn.
Looking ahead, the board said it had “continued confidence” in at least 3-5% per annum underlying adjusted operating cash flow growth on average for the 2015-20 period, underpinned by the “strong delivery” in 2016.
Adjusted operating cash flow was expected to exceed £2bn in 2017, with capital expenditure to be limited to £1bn.
The board declared a full year dividend of 12.0p, and added that in the prevailing environment, restoration of a progressive dividend was currently expected when group net debt is in the range £2.5-£3.0bn, targeted by the end of 2017.
“2016 was a year of robust performance and progress in implementing our customer-focused strategy,” said group chief executive Iain Conn.
“We delivered our key objectives including improved customer service and more innovative offerings and solutions – while repositioning the portfolio, building capability and driving significant cost efficiencies.
“2016 was a busy year for the team, but we have delivered a lot, and Centrica enters 2017 a stronger company – with encouraging underlying momentum and positioned to deliver longer-term returns and growth.”