British Gas-owner Centrica surges on £2.8bn sale of US business
Centrica (CNA.L), the owner of British Gas, has agreed to sell-off its US energy business for $3.6bn (£2.87bn) as part of a turnaround plan.
Centrica said on Friday it had agreed to sell its Houston-based subsidiary Direct Energy to NRG Energy (NRG) for $3.6bn in cash.
News of the deal sent Centrica’s share price surging over 35% at the open in London.
Centrica chief executive Chris O’Shea said the deal was part of plans “to become a simpler, leaner business” that was “focused on the UK and Ireland where we have leading market positions.”
Centrica acquired Direct Energy in 2000 for $912m in cash, giving the company its first presence in North America. The energy supplier has 2.7 million customers in the US.
News of the proposed sale came as Centrica announced falling earnings, a half-year loss, and a continued exodus of customers.
Read more: British Gas owner Centrica axes 5,000 staff in manager cull
Earnings before interest and other costs fell by 19% to £869m in the six months to 30 June. Centrica made a half-year loss of £135m ($172m).
On an adjusted basis, underlying profit fell by 14% to £56m. Centrica blamed “negative impacts of COVID-19, low commodity prices and warm weather.”
The company ditched its half-year dividend payment and said it couldn’t provide any guidance on second half performance, blaming the COVID-19 pandemic.
O’Shea called the performance “resilient” given the backdrop of the pandemic.
“Our mission now is to turn around the company by putting customers at the heart of everything we do and creating a simpler, leaner, more modern and more sustainable company,” he said in a statement.
Last month the company announced plans to make 5,000 employees redundant as part of its overhaul. Centrica took one-off charges of £1bn in the first half of the year, including £251m in restructuring charges.
Over 100,000 customers left Centrica’s home heating brands in the last six months, including 62,000 British Gas customers in the UK.
“Although we have a lot more to do, we have the people, the brands and the market positions to deliver a successful turnaround,” O’Shea said.
Listen to the latest podcast from Yahoo Finance UK
